Retailers using traditional PayPoint terminals face a £120 annual fee in a move by the company to phase out its ‘yellow box’.

From 1 June all retailers with yellow terminals will have to pay £10 a month or upgrade to its EPoS-enabled PayPoint One from £10 a week as part of its plan to “retire” the old terminal.

However, retailers can opt out of their contract free of charge, again from 1 June.

Lewis Alcraft, commercial director at PayPoint, said: “The yellow boxes are increasingly old, increasingly costly and complicated to manage and in time we’re going to have to retire the platform.”

Sandy Sarwar, who has PayPoint installed in three of his Dundee Pricekrackers, did not welcome the news.

“I’m looking at an extra £360 a year – £10 is bad enough without paying £10 a week for the new terminal,” he said. “PayPoint know they’ve got retailers over a barrel.”

Jeetendra Kanji, of Vineyards Food & Wine in Wembley, said he would now probably leave

“Considering we make practically nothing in terms of commission this is very upsetting,” he said.

“If they asked us for a fee and upped our percentages it would be a different story.”

Meanwhile, Judith Milne, of A Sockett & Son in Gateshead, has questioned its viability. “I’m already paying £20 to get paper invoices as I don’t have a computer so I’d really have to consider whether it’s worthwhile,” she said.

“PayPoint used to be a footfall driver but these days people just come in and pay their bills.”

Mr Alcraft said there had been “really positive feedback” regarding PayPoint One.

“No one is being forced to move over, we wanted to give people a softer lead in and a chance to think about it,” he said. So far, 3,500 retailers have signed up to PayPoint one – a third were new customers.

The company also announced PayPoint Pro will be launched within the next few months – an advanced terminal offering retailers stock ordering and back office management.