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PayPoint is aiming to grow from handling 100m parcels to 250m per year as a ‘medium term target’, equivalent to an extra 11,463 parcels per store, based on its current estate size.
In its results for the quarter ending 31 July, the company revealed dramatic parcel network growth, with the rollout of Royal Mail parcel services to 5,000 of its Collect+ sites now complete.
The total number of PayPoint stores offering Collect+ parcel services also grew by more than 14 sites per day over the quarter, taking it from 11,786 to 13,085 shops offering parcels.
The period also saw PayPoint make a major investment in Yodel, saving it from the brink of collapse. PayPoint said the deal would accelerate the number of shoppers opting to pick up their parcels at a shop counter. The investment will also drive ‘further expansion’ of the number of shops offering Collect+.
The rise of PayPoint, especially its partnership with Royal Mail was described as a concern by Post Office retailers, as both Post Office and PayPoint compete to pick up both more carriers and a greater share of their parcel volumes.
PayPoint also made 3.8% more through rental fees paid by shop owners, driven by an inflation linked increase and 134 more stores using its PayPoint One and PayPoint Mini terminals, taking the total to 19,431 sites.
As standard, there was no comparable inflation linked increase in the commissions paid to store for services, with the freeze essentially devaluating the profitability of each transaction in stores.
The number of stores using PayPoint’s Lloyds Cardnet and Evo card payment services also increased, helping to drive the company’s revenue growth in this sector.
Nick Wiles, chief executive of PayPoint, said: “This has been a busy and productive quarter for the group in which we have delivered further net revenue growth and established a strong platform for continued progress in the current financial year.
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“The strategic investments we have made in Yodel and obconnect, along with an expanded partnership with Incomm in Love2shop, underpin our confidence in a number of our key new opportunity building blocks, adding further momentum to meeting expectations for the current financial year and achieving our medium-term targets.
“Consumer behaviour across a number of our businesses has improved over the quarter, though we continue to monitor energy and cash bill payment activity as we head towards the second half of the year. Our expectation remains that the consumer outlook will
improve during the course of the year.”
Expanded partnership with Love2shop
PayPoint also announced it has expanded its partnership with Love2shop, so that high street vouchers will be available in more sites. This could mean more competiton for retailers already offering these, as the multi-year agreement will see distribution of the gift cards in new retailer partners including grocers and high street stores beginning September 2024.
PayPoint has extended the partnership as high street vouchers continue to “perform ahead of expectations”.
Wiles: “‘We’re delighted to be expanding the distribution of Love2shop gift cards into more major UK retailers, building on our existing partnership with InComm Payments. Love2shop is the leading multi-retailer gift card in the UK market, offering customers the choice to spend with over 90 high street and online retail partners, including M&S, Argos, TK Maxx and more.”
The expansion could deliver more than £100m in Love2shop billings over the next five years, PayPoint said, “building on our progress in establishing new distribution channels through 2,600 multiple retailer partners over the past year and positioning Love2shop as the leading multi-retailer gift card in the UK market”.
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