PayPoint CEO Dominic Taylor has defended decreased commission payments to retailers as “much less relevant” than the services its EPoS tools provide retailers.
The company’s half-year results reveal that while service fees paid by retailers to PayPoint increased by 41%, commission payments to retailers fell by 7.8%.
Asked if this represents a fair deal for independents, Taylor told RN: “It’s a fair deal for retailers because, uniquely, we’re driving footfall, increasing the range of footfall coming in and driving new products and services that retailers need to run their businesses better.”
Taylor highlighted a cash register-reliant retailer who cut wastage by 75%, and increased revenues, margins and productivity after adopting the firm’s PayPoint One EpoS Pro package.
He added that stores have reduced stock turnover by one week per year after adopting PayPoint’s EPoS system, saving £70,000. “For me, if a retailer can achieve that, the discussion about commissions and service fees becomes much less relevant,” he concluded.
Revenues from key payment services offered by PayPoint were all in decline, including top-ups (-2.2%), ATMS (-1.5%) and parcels (-19.6%). Asked how the company planned to turn around its parcel volume decline, the CEO said: “I’d hope our new eBay partnership will build volume over time and more than compensate.”
Taylor said the reduction in bank commissions paid to ATM providers was affecting its service in “an indirect way”. The size of its cash machine network shrank by 163 sites in the past six months, but he claimed PayPoint was benefiting from the changes.
“Other operators are taking ATMs out of sites they don’t regard as profitable. Because of our model, we can put machines into those sites profitably – we take them out of our existing lower-performing sites and put them into sites that drive more value.”
The results were well received by the company’s shareholders with a 7% increase in share price driven by a 2% increase in dividends. Overall revenues increased 8.7%, leading to a 4% rise in profit before tax.
The company’s “prime focus” is upgrading retailers with existing T2 ‘yellow box’ PayPoint machines to its ePoS system ahead of a switch off of the old system scheduled for the end of 2019. Taylor said the company was: “slightly ahead of where we expected to be” with 11,200 stores using the new system. He said new payment and parcel services may be “impossible” to carry out on the old machines, meaning those who do not convert would lose out on revenues, such as those from transport schemes.
One of the biggest recent success has been improving its relationships with retailers, with Taylor highlighting, substantial reductions in call waiting times, automatic claim payments, the ability to offset card transaction revenues against service payments, the rollout of its PayPoint One app for iPhone users and a new app for parcel service users.
The new app for parcel services launches amidst criticism of the recently launched eBay parcel partnership. The partnership is live in 2,500 sites, with the average site handling eBay 34 parcels since it launched approximately four weeks ago. Retailers complained that the commission was lower than on other parcel services yet due to the need to manually enter codes, they took longer to process. Taylor admitted: “It’s a new service done in a slightly different way so inevitably there will be a little bit of friction here and there but by and large most of that volume is flowing through without any issues.”
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