It's not a free market because the people sending the money (the customers, in this case) don't get to choose which provider to use.
Moreover, laying all the blame at the feet of government for these companies being scumbags is precisely why I said private industry has the wrong culture for this sort of thing.
No, the government is the entity making a selection among several choices, and is the entity in the position to negotiate the rates.
Therefore they could bargain for lower rates if they wanted.
Misrepresenting the choices isn't making your case.
The government is the entity with power here. The government regularly dictates all kinds of terms for their contracts. All the time.
JPay’s rapid rise stems in part from the generous deal it offers many prison systems. They pay nothing to have JPay take over handling financial transfers. And for every payment it accepts in these states — prisoners typically receive about one per month — the company sends between 50 cents and $2.50 back to the prison operator.
The government does have the power, and they most likely are outsourcing this part of their non core infrastructure like most other companies do, to save money.
But Lower rates for whom? Inmates. Why would prison officials care if inmates get lower rates?