Even if you haven’t heard of PayPoint, you’ve probably seen its signatory yellow and blue “P” sign adorning the front your local corner shop.
Perhaps you or someone you know will have used its payment services to top up your gas or electricity, get your pension payments, top up your mobile phone, or used one of its card-processing machines when you’ve paid by card.
The company provides payment points and terminals in more than 30,000 convenience stores across the UK, but in recent years it has begun a new foray – moving from simply providing the hardware to building its own software.
PayPoint CIO Jon Marchant, who has been with the company for more than seven years, says the shift first began four years ago, when he wanted to replace the old PayPoint terminal. The terminal, which was widely used across the country, was about 13 years old “and about as powerful as one of those pre-smartphone era Nokia phones,” he says.
“I wanted to replace the terminal with something more modern, cheaper and more flexible,” says Marchant. “The business signed up to replacing the terminal on cost grounds, but we never got round to prioritising it because there was also something sexier to focus on.”
The company’s IT department then came up with an idea: what if, rather than just getting a new terminal, the company created an electronic point of sale (Epos) system?
“That idea came about, and broadly turned the boring and sensible business case into quite an exciting business case,” says Marchant, adding that this was an area “we had no experience in whatsoever”.
“We had a period of 18 months when we went from having absolutely no knowledge of the Epos software business to being one of the biggest providers of Epos software to convenience [stores] in the UK,” he says.
“We’ve taken a crazy idea and done it on the back of needing a new terminal anyway. It’s just been an incredible success”
Jon Marchant, PayPoint
The company now has 8,500 Epos terminals, and aims to reach 20,000 in the next three years. PayPoint still operates its traditional payment products, but as the industry becomes more digital, with smart meters and online payments, it needed to keep up with the times – and the Epos market seemed like a good fit.
“We’ve got all the traditional cash payment stuff kind of plateauing, with everyone stopping using cash and smart meters coming out,” says Marchant. “On the other side, the Epos bit has grown really quickly and that’s changing the character of the company.
“We’ve moved from an organisation where we gave our terminals to the convenience stores for free to do our transactions, and when the retailer did the transaction, we’d get a cut from the utility suppliers or phone providers. We still do that, but the convenience stores now pay for the terminals because of all the value-added services.
“It’s quite a cultural change for the company, because the future is based on providing the retailer with a fantastic service as well as agent commission for doing the payments. We’ve now become very important to the shops because our technology is at the heart of the shop.”
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While there has been a huge amount of innovation in the food and leisure industry, with restaurants offering menus and payments on tablets and smartphone apps, the convenience industry is a completely different story, says Marchant.
“I don’t think there has been much innovation in the convenience Epos market,” he says. “There are thousands of stores that don’t even have a cash register because it’s unaffordable.”
Marchant says the Epos in the convenience market “is generally [Microsoft] Windows-based computers that generally work offline and get loaded overnight”.
When PayPoint began its foray into the Epos market, it certainly didn’t expect such huge growth, he says. Suddenly, the company has become a big player in the food chain.
“We’ve taken a crazy idea and done it on the back of needing a new terminal anyway,” says Marchant. “It’s just been an incredible success.”
Marchant began his career by working his way up in financial services, from selling mortgages, to managing a bank branch and ending up in a bank’s head office. From there, he got into IT and “did every role feeding into the CIO role” before landing the CIO role at PayPoint in 2011.
He describes PayPoint as a technology company, and says the main difference from his previous jobs is that the company is very fast-paced, able to go from idea to delivery in a matter of days.
“There’s an entrepreneurial vein running through the whole company,” he says. “It’s only 20 years old and hasn’t grown so big that it’s lost the innovation side.”