PayPoint is to increase its monthly service fees for shops by 3.6% beginning in April. The move has drawn criticism from retailers and the Fed, which “expressed extreme disappointment” after meeting with the payments firm.

Letters advising of the increase have been arriving with PayPoint’s network of retailers since Friday last week (28 February), the Fed reported. PayPoint said the increases bring the fees in line with inflation, measured by the Retail Price Index (RPI), which stood at 3.6% at the time of the decision. This is despite retailer commission from PayPoint services not being tied to inflation in the same way.

PayPoint stores receive £1k in average commission

“After being advised of the impending increase at a meeting with PayPoint last month, Fed officials asked the company to think again,” the Fed said in a press release. It also noted that when PayPoint increased service fees in 2022 and 2023, the company “absorbed the additional costs caused by inflation to protect its network of retailers”.

Fed warns service fee rises could push retailers to revaluate offering PayPoint services

Fed national president Mo Razzaq added: “It is a huge blow that although we raised the concerns of members with PayPoint, this appears to have fallen on deaf ears and, once again, the company is raising its monthly service fee in line with the RPI. PayPoint needs to be aware that this move could have consequences, with some retailers now looking ever more closely at the feasibility of offering some of its services.”

PayPoint CEO defends decrease in commission

A spokesperson for PayPoint told Better Retailing: “Our longstanding commitment to drive more opportunities to earn for our retailer partners remains strong,” saying that this has driven “an over 20% increase in commissions paid to our retailer partners year on year”.

The company did not immediately break down this figure.

“It is therefore important to consider the standard RPI increase of 3.6% in that context, with more investment this year in a new store growth specialist team to support our retailers in maximising opportunities to earn, an increase to the amount of face-to-face contact in store via our retail relationship managers and delivering additional support to help retailers earn more revenue from these services,” the spokesperson continued.

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