Steve Denham looks at the ongoing PayPoint issue and what it means for retailers when employee costs are taken into account.
In 1992 Hoover in the UK ran a promotion offering free flights and it destroyed the company as the take up was far greater than they anticipated or budgeted for. They failed to understand or limit the risks involved in offering customers something that was just too good.
I am left wondering if PayPoint have made a similar type of error by reducing the cap on commission payments on some transactions. Retailers have been busy on social media reacting angrily to the change in terms. While others are saying that they don’t know what the fuss is about.
Time is money
Taking the adult National Minimum Pay Rate as the benchmark, the 7p cap means that a transaction must be completed within 39 seconds to allow a retailer to cover their direct employee cost. The 10p capped transactions allows for a 65 second transaction. This of course is before the other costs that are associated with being a PayPoint agent or running a business.
Asking retailers to potentially undertake tasks that deliver a loss is morally doubtful. With the departure of senior figures from PayPoint this week may be the company have worked this out for themselves.
Retailers have been taking to Twitter to express their disapproval. Catch up on what's been said using the hashtag #paypointpayfair. There is also a Facebook page where retailers can join the discussion.