Payzone has signed a deal to replace its rival, PayPoint, in 460 Tesco Express and Tesco Extra stores, with the change-over starting last month.

British Gas revealed the change in a message to customers stating they could now top-up via Payzone in Tesco outlets.

Asked about the partnership, a spokesperson for Payzone told betterRetailing: “We are providing bill payment services in Tesco stores where a previous operator had done so. This is a like-for-like replacement when it comes to bill-payments services.”

The announcement marks Payzone’s second major contract win at the expense of PayPoint, following British Gas’s decision to move from PayPoint to Payzone at the start of 2020.

A spokesperson for PayPoint said the change was “naturally regrettable” and came after “many successful years” partnered with Tesco.

The company added its “network of 28,000 locations across the UK, which is bigger than all banks, supermarkets and Post Offices put together, remains as robust as ever”.

PayPoint urges local authorities to utlise the “Cash Out solutions”

The likely impact on independent stores

The move brought concerns for nearby Payzone and Post Office outlets that previously had a local monopoly on British Gas top-ups.

Some newly added Tesco Payzone sites are less than 200 metres from an existing independent Payzone retailer, such as in Purley, London.

A CWU spokesperson warned if parcel pick-up and drop-off services were included at the Tesco sites, “poached” parcel volume could make some nearby Post Office branches “unsustainable”.

EXCLUSIVE: Tesco replaces PayPoint with Payzone in 460 stores

Payzone refused to answer if it would waive minimum-transaction charges for stores that dropped below the required weekly threshold due to new competition from Tesco, responding: “This partnership is all about enhancing our network. The shoppers using this service already visited this Tesco to do their shopping and pay their bills, and we are providing a continuity of bill-payment services for these shoppers.”

Conversely, PayPoint partnered stores welcomed the news. “It’s a good move for us,” said Nash Dhindsa, of Liquor Cellar in Solihull, Warwickshire. Tesco Express stores were often part of PayPoint’s CollectPlus parcel network. The removal of these sites was highlighted by local stores offering CollectPlus as a potential opportunity to gain additional footfall and parcel volumes.

The PayPoint spokesperson said: “We remain committed to supporting every one of our independent retailer partners with the numerous growth opportunities beyond bill payments, from EPoS and card payments, to parcels and rapid local home delivery in partnership with Snappy Shopper.”

Retailers can use Payzone’s storefinder tool online to check if a nearby Tesco site has switched from PayPoint to Payzone.

Read more Payzone news