Payzone is one of the latest companies to be accused of piling pressure on partnered stores following its decision to increase its weekly fees.
Letters sent to stores on 5 March, seen by Better Retailing, stated stores will be charged £5.54 or £8.85 (with card processing) per week from 4 April.
The latest increase means some stores are now paying more than five times extra per week than they were two years ago. It means a more than 70% increase for some stores compared to their current weekly charge.
Despite Payzone’s current three-year contract length for new partnered stores and its 12-month notice period for existing partnered stores, due to further terms changes explained in the letter, Payzone retailers can terminate their contract without paying early termination fees. To do so they must inform Payzone by 4 April.
Maqsood Akhtar, owner of Blackthorn News & Food in Rotherham, Yorkshire, has chosen to remove the service rather than pay the increase.
He told Better Retailing: “I provide Payzone essentially as a community service. I make no money from it. The price increase makes this harder for me to justify. I will be cancelling the service. But I suspect many stores will simply miss this letter.”
Fellow Yorkshire shop owner Lynda Brown, of Brown’s Newsagents in Halifax said: “I have taken advantage of the 60-day, no-exit-fee option. So, I will no longer be a ‘Payzoner’. The hardest bit is letting my customers down.”
Why is Payzone increasing its weekly fees for retailers?
Better Retailing questioned Payzone’s parent company, the Post Office (PO), on why retailers’ charges were increasing while their commission rates remained frozen.
A PO spokesperson responded that the changes will “simplify” its pricing structure.
They added: “We continue to invest in the products and services offered through Payzone and the price remains great value against our nearest competitor.”
The letters also claimed Payzone is “moving to a service-based charging model”. It warned those stores with older Payzone terminals that their devices are “no longer supported”.
This means they cannot be replaced if they break. In addition, no technical support will be provided.
Stores are being advised to move to a newer device instead – Payzone Plus, which can enable stores to accept parcels and operate Jisp’s shopper rewards scheme.
The PO spokesperson explained: “Retailers can request an optional free upgrade to a new Payzone terminal, which is faster, mobile within the store and more reliable.”
Payzone is not the only company increasing its fees. PayPoint also announced it is to raise its charges by 3.6% from April.
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I became disappointed with Payzone a few years ago I asked to leave as it was costing me £7 a week only to be told I was in a 3 year contract .Fortunately they changed my terms and I was able to leave with no fees I have not seen any drop in turnover since the terminal was removed and life for my staff is much easier as they do not have to deal with all the issues such as faulty keys credits no showing etc etc I would never put Payzone back we lost a lot of time and money customers only come in for Payzone and do not spend in shop Please check if you are covering your costs if you have a terminal and take the opportunity to get rid