Store owners are planning to take action after PayPoint announced plans to reduce the commission on a number of transactions next month.

Retailers are furious that PayPoint will reduce the cap on their commissions from 13p to 10p for general bill payments, and to 7p for other transactions.

Shahid Razzaq, of Premier Mo’s and Family Shopper in the Glasgow area, estimated that he would lose £189 per month based on a £50 drop in commission to £120; bank charges of £178; PayPoint fees of £41; and staff wages of £90, calculated by the time consumed by processing transactions.

“It’s now a loss leader,” he told C-Store. “PayPoint said it raises footfall by 20%, but that doesn’t mean a 20% increase in sales. They told us it’s because of contract negotiations, but that’s mismanagement on their part.”

He said he was considering introducing a surcharge for PayPoint customers, or insisting they make additional purchases. The idea has gained support from other retailers on Twitter.

Shahid said he had contacted his MP who promised to raise the issue in Parliament should he gain re-election next week.

National Federation of Retail Newsagents chief executive Paul Baxter said it would “pursue every legal action open to us” if PayPoint did not reverse its decision, which he described as “tantamount to exploitation”.

A spokesman for PayPoint said the decision reflected a significant increase in its costs and “highly competitive market conditions which have seen the fees, including caps, paid by our clients fall over successive renegotiations over the last decade or so, when the commissions we’ve paid haven’t changed”.

He added: “Less than a quarter of transactions processed are affected – that is, the commission earned on three quarters of transactions over the last year would be unchanged if the new cap were in place then.

“Our proposition has always been that PayPoint is far more than just the commission. The real benefit comes from the additional footfall and sales they generate (and goodwill for the store).

“The latest annual CTP survey of shoppers’ habits and expenditure reported that the average PayPoint customer spends 25% more per visit than an average convenience shopper (£7.66 vs £6.13) and visits the shop more frequently (4.7 times a week on average vs 3.6 times).”