The NFRN is considering taking legal action against PayPoint after the payment services provider announced a raft of commission cuts for retailers.

In a letter sent to stores last week, PayPoint announced commission earned on energy and TV licence payments of 0.5% capped at 7p, down from 0.5% capped at 13p according to retailers.

It added that commission earned on general bill payments fell from 0.5% capped at 13p to 0.5% capped at 10p, while commission on housing and local authority payments fell from 1% capped at 13p to 1% capped at 10p. The changes come into effect from 18 May.

NFRN chief executive Paul Baxter said the federation has sought legal advice on the issue and is also looking to challenge the Competition and Markets Authority on grounds of “abuse of dominance”.

“Retailers need to seriously consider whether they can afford to continue to subsidise PayPoint’s massive profits,” he said. Retailers also called on terminal providers to allow them to add their own handling fees to make the service more financially viable.

Joe Sweeney, who is battling Payzone after he introduced a handling fee at his Dublin newsagents two years ago, said: “We can’t afford to keep running a business on these margins and having a moderate handling charge would definitely help retailers.”

We can’t afford to keep running a business on these margins and having a moderate handling charge would definitely help retailers

NFRN national vice president Ralph Patel added: “Some of the commissions are outrageous and, in some instances, the bank charges are higher than what the retailer is earning.”

A PayPoint spokesperson said: “We have not reduced the commission caps for some years, but we have recently had to renegotiate with our clients. PayPoint is now making less while our costs are also increasing.

“In regards to handling charges, we feel it is wrong to penalise customers by charging extra for paying bills in cash when they are unable to make direct debit payments.”

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