PayPoint delivered bumper profit and revenue increases in the past six months as the company pressed ahead with new services within payments, parcels and newspaper-voucher handling.
Revenue increased to £70.2m in the six months until 30 September 2021, compared with £60.7m in the same period in 2020 – a 15.6% rise. This was accompanied by a 30% increase in its pre-tax profits to £21.9m.
The results announcement came a month after the company announced the rollout of its Counter Cash service – paying stores for providing cashback over the counter for the first time. Chief executive Nick Wiles told betterRetailing the company was “rolling out with 900 sites live and around half transacting”. He added that a marketing campaign to promote the service would launch in the new year.
November also saw the Department for Work and Pensions (DWP) begin to move 350,000 benefits recipients away from Post Office Card Accounts (POCA). Those without a bank account can now withdraw funds through a payment-exception service (PES) in PayPoint stores.
Asked about the progress of the scheme, PayPoint finance director Alan Dale told betterRetailing: “They are releasing extra thousands [of customers onto PES] every week. We’ve got more than 15,000 using it.”
PayPoint stores are also benefitting from greater local-authority uptake of ‘cash out’ services that enable council hardship vouchers to be paid out in store. Wiles said: “We’re talking with the Welsh government at the moment about its disbursement programme, which is going to run over the winter months.
“With so many people moving into ‘fuel poverty’, that’s going to be a challenge we’ll have to respond to.”
The energy crisis
PayPoint said rising energy costs may have a net benefit for top-ups in stores. Wiles said growing ‘energy poverty’ might see suppliers encouraging people to move onto pre-payment, rather than other forms. He added that this was “potentially positive for our business, but not good for the consumer in general”.
In the same week as the financial results were released, energy regulators Ofgem accepted PayPoint’s commitment to “change behaviour” and ended its Competition Act investigation into PayPoint’s terms with retailers and energy suppliers.
PayPoint is to pay £12.5m to Ofgem’s voluntary redress fund and has agreed to scrap exclusivity clauses with both retailers and energy suppliers.
The POCA replacement deal with the DWP was possible due to PayPoint’s acquisition of voucher company I-Movo, and the same partnership is helping to phase out physical newspaper-subscription vouchers in stores.
As well as longstanding I-Movo client Guardian Media Group, Nick Wiles revealed to betterRetailing that Daily Mail owners DMG Media and Telegraph Media Group are now also trialling digital subscription vouchers in PayPoint stores, with talks also underway with News UK.
EXCLUSIVE: Impact of Tesco and Payzone deal on indies
“The mindset [of publishers] has moved from ‘can it be done?’ to ‘how do we do it?’,” he said, predicting a shift to digital newspaper-subscription vouchers in the next “12- to-18 months”.
PayPoint said it was benefitting from a surge in click & collect, with a 27.6% rise in parcel transactions in store, an average of 183 parcels per store per month.
The company is also working to build its parcel sending and returns services in stores, with 700 Amazon Returns sites launched recently “ahead of peak trading” and 3,000 stores now providing DHL parcel returns.
Despite the news, Wiles was cautious in predicting Christmas parcel trends. “I think carriers would expect it to be longer and flatter than it has been historically because of the supply chain challenges,” he said.
Snappy Shopper and the lottery
Following PayPoint’s £6.7m investment in Snappy Shopper in July, Wiles said 130 PayPoint stores had signed up with the grocery ordering company, and that the majority were taking more than £1,000 per week in sales. “We have probably twice or three times as many stores in the pipeline,” he added.
Former Sainsbury’s boss Justin King is a fellow Snappy Shopper investor and a senior adviser at Snappy Shopper.
He also sits on the advisory board of National Lottery bidders Sazka Group. Asked if PayPoint had spoken with King about the upcoming Fourth National Lottery Licence (4NL), Wiles told betterRetailing: “There haven’t been many conversations around the 4NL. I know he’s very involved in the Sazka bid, let’s see what happens. If it’s a conversation to have at that point, we’ll have to see. “I’m not aware of anything and haven’t discussed anything with him at this point.”
Asked if PayPoint’s network could host National Lottery services, the chief executive said: “We have a great network, but at the moment, Camelot has its own network, so that’s a lot of discussion to have if you were looking at bringing the networks together. I would have thought that would be a huge amount of work.”
Read more PayPoint news