The NFRN is to launch a formal complaint against PayPoint with the Payment Systems Regulator (PSR) following a meeting with legal advisors this week.

The federation said it will also seek a full investigation into the over-the-counter payment and collection services market on the back of the recent set of commission cap cuts by PayPoint.

The NFRN said specific details of the complaint to the PSR, an independent economic regulator, are being kept confidential until launch. However, it said it would focus on growing awareness of retailers’ concerns and consumer issues, including the validity of PayPoint’s exclusivity clauses and restrictions on commissions.

The federation’s legal team has also advised it to widen the scope of the complaint against the payment services provider to include all of its terms and conditions of business.

NFRN chief executive Paul Baxter said: “We are not taking this decision lightly.  We appreciate that seeking a full market investigation into the over-the-counter payment and collection services market may have unforeseen and far reaching consequences and an uncertain outcome, as well as embroiling numerous other parties.

“However, having previously raised our concerns with PayPoint they have not listened.  We can, therefore, no longer sit back and watch whilst this company funds its profits at the expense of our members.”

Mr Baxter said the federation will also be exploring other legal options and will be writing to PayPoint to “detail our issues”.