Payzone services at risk after fee rise, the Fed warns

The national president of the Federation of Independent Retailers (the Fed) has warned that independent retailers might think twice about providing Payzone services in their stores following the news the company is increasing its fees by 3.5% from April.

As Convenience Store previously reported, letters advising of the increase have been arriving with members since the beginning of this month. They advise that an increase to its weekly charge to £5.54 - and £8.85 for those offering card processing - are in line with its annual retail index price adjustment.

Payzone says the move will enable the company to continue investing in service improvements, security updates and partnerships that bring value to its network of retailers.

Describing the increase as a bitter pill for Payzone retailers to swallow, Mo Razzaq said: “Members affected by these fee increases may seriously think twice about continuing to offer Payzone services.”

They took effect as businesses prepared to face the perfect storm of higher wage costs and rises to employers’ national insurance contributions, Razzaq added.

The Fed’s national deputy vice president, Hemanshu Patel (pictured) said he had already cancelled his Payzone contract: “Payzone has become an unsustainable service for retailers like me. The system is slow, unprofitable, and has seen little meaningful improvement over the years.

“With rising operational costs and better alternatives available, it simply doesn’t make sense to continue offering this service in my store. Given the current economic climate, many small businesses will be forced to reconsider their partnership with Payzone, just as I’m doing.”

Responsing to the comments, a representative from The Post Office, which provides the service, told Convenience Store: “We’re making changes to our Payzone pricing model to simplify the pricing structure. Alongside these changes, we continue to invest in the products and services offered through Payzone and the price point remains great value against our nearest competitor.

“As part of these changes, retailers can request an optional free upgrade to a new Payzone terminal which is faster, mobile within the store, and more reliable. A no-fee exit period is available for retailers with older terminals if they do not wish to continue to offer Payzone services.”