By letting you in, the reader allows you to make a journey you have already paid for - within the zones covered by the Travelcard. It would be completely unreasonable to expect that the PAYG balance should be relevant to allowing entry at a station covered by a prepaid Travelcard. However, it is the responsibility of the user to ensure that if they travel beyond the area covered the PAYG balance is sufficient to cover that journey.
No, you don't need any PAYG. If you have a Travelcard loaded on the card, and are touching in within the zones covered you do not, and should not, require any PAYG balance on the card to be allowed to enter.
If a charge had been made at the destination station it would have been for the journey actually made; this would not have resulted in having to pay extra. On the contrary, it would have rendered the Penalty Fare invalid and would have therefore resulted in the OP paying less than the Penalty fare that they now face.
I agree there is probably no point fighting it as the OP did not find a way to touch out and it's too late now, but a PF can still be contested after it has been paid so it would not make it more expensive to do so.
It can be contested, however there is always the risk that the TOC don't fancy fighting it, and instead withdraw and repay the PF and go for a slam-dunk Byelaw 18 prosecution. That would, of course, be more expensive unless the OP managed to obtain an absolute discharge, which seems unlikely.
If they tried, you could try to argue it was an 'abuse of process' as you accepted the penalty and there is a defined appeals process to be followed - people can't be punished twice or have one resolution replaced with another of higher severity unless there are exceptional circumstances (making the original decision to issue the PF flawed).
IIRC, Southeastern have form in this area.
I still have a zero deposit Oyster.
A Byelaw 18 prosecution would be anything but “slam-dunk”. The OP had a valid ticket when boarding at Cannon Street and presented his ticket for inspection when asked.
And this is supposedly one of the benefits of Oyster (as described by TfL). No need to worry what journeys you might make in advance, the system will ensure that you are charged the correct fares (or a cap) for the journeys you actually make.
It is within the rights of a TOC that has issued a penalty fare to cancel the penalty fare (refunding any payments made) and prosecute instead.
I don't know exactly. It's possible that some note might be made of services available at the station where a touch was made, or it might just go into a pool.
This was the plan when the OEP was (silently) introduced in 2010. Abuse of the OEP by Southeastern led to it's withdrawl so they now have to look at touches instead.
That would mean a PF even if there was sufficient credit if it didn't couldn't see the tocuh in.
I believe that they would see that there was a Travelcard loaded on the Oyster card though, and they would presumably be aware of which train the OP left and therefore the direction of travel.
I don't think that allowing negative balances is meant to be a 'feature' of the Oyster system. It's merely a way of making it easy to resolve an accidental negative balance scenario. Splitting hairs maybe, but it may become an important distinction down the line.
One could argue that it's their trains, so their rules. However, it does seem a puzzling distinction between the rules on TfL services and the rules on TOC service when making a journey such as you described. The rules for both networks say that you must touch in at your origin station and touch out at your destination station. But only the TOC insist that you must have sufficient PAYG go credit before starting the journey.
Personally I would pay the PF and then appeal. In the appeal, I would highlight the subtle difference between the TfL rules and the TOC rules and its practical effects. I would question the need for the TOC insistence on having sufficient PAYG go credit before starting the journey when, as you state negative balances can be resolved quickly and easily. I'd also highlight that had the RPI let you touch out, the correct fare would have been charged anyway. And in questioning the need for this additional rule, I would say it merely seems to be a way of catching out honest passengers and raising revenue for the TOC.
