One of PayPoint’s award-winning retailers is threatening to chuck out his terminal because of the service’s poor margins.
Ushi Vithani, owner and manager of The Front Page, a CTN store in Thamesmead, South London, has dealt with PayPoint, the utility payment network for the last 11 years. He has twice been named top performer by PayPoint, based on monthly sales growth.
The bulk of Vithani’s transactions relate to utility bill payments and mobile phone top-ups. Vithani said: “From day one of starting with PayPoint there were issues.
“They said they could negotiate favourable banking rates on transactions for me, but their arguments didn’t follow at all. Margins have always been a problem. I would say 40% of our annual sales are made on PayPoint, yet we see only about 1.1% of that in margin terms.
“They used to compensate us with competitions and incentives, but in the last few years even that has stopped.”
He added: “We are also losing customers because of the queues of people waiting for PayPoint services. Only 20% of our PayPoint customers pay for other products or services.”
Vithani said he was now reviewing his business with PayPoint and that he was considering switching to services offered by the Post Office to boost margins.
Ironically, the Post Office was also slated by independents recently for restricting margins on a range of services such as cash machine transactions and National Lottery sales (‘C-stores attack PO terms’, The Grocer, December 4, p4).
Vithani’s comments echoed those made by other industry players to The Grocer this week. John Heagney, of Nisa-Today’s, commented: “No retailer makes any money handling utility payments.”
He added that utility companies tended to hide behind PayPoint and would not be drawn to comment on the issue of margins.
A PayPoint spokesman said: “Commission paid as a proportion of PayPoint’s turnover has risen from 30% to 56% in the last three years.
“PayPoint is a service, not a product. Unlike most other lines offered by a retailer, there is no need to buy stock and no stock shrinkage.
“We are not aware of any other provider offering a better overall proposition.
The spokesman added: “If any PayPoint retailer feels we bring them too much business we are happy to discuss ways of managing it.
“We continue to offer incentive schemes associated with specific types of payments.”
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Rod Addy