British Gas has ended its relationship with PayPoint for a new deal with rival Payzone.

The agreement means the energy giant’s prepayment customers will no longer be able to top up at their usual newsagent or supermarket – they’ll need to go to a Post Office instead.

A prepayment meter is a special type of energy meter that can be installed in domestic properties. With a prepayment, or pay-as-you-go tariff, you pay for your energy before you use it – usually by adding money to a key or smart card, which is then inserted into the meter.

Prepayment tariffs tend to be a much more expensive way to pay for energy than pay monthly tariffs.

PayPoint is currently one of the main ways of topping up prepayment meters for British Gas customers. It has terminals in 28,000 convenience retailers, including newsagents, supermarkets and garages. Customers can also make payments at 11,500 Post Office branches.

But from the New Year, British Gas customers will have to top up at one of Payzone’s 13,000 locations or at the same 11,500 Post Office branches.

The changeover means British Gas prepayment customers will have 24,500 places where they can top up, compared to 39,500 now.

In a message to shareholders, PayPoint said it had “been unable to agree appropriate renewal terms for its multi-year contract and will cease working with British Gas and its customers after 31 December 2019”.

PayPoint expects the loss of the British Gas contract to hit its net revenue for 2019/20 by £1.4m and by £3.5m for the year after.

Patrick Headon, CEO of PayPoint, said: “After a long and mutually beneficial partnership, it is disappointing for PayPoint and British Gas customers that we have been unable to agree a renewal of our contract.”

What should British Gas prepayment customers do?

British Gas prepayment customers who don’t want to go to a Post Office to top up their card or key have a couple of options.

Firstly, they can switch to an energy supplier which still uses PayPoint. These include EDF Energy, Ovo Energy, nPower and SSE.

Secondly, customers can see if they are eligible for a Smart Pay As You Go meter with British Gas. This type of meter lets you top up online, via a mobile app or over the phone.

Finally, prepayment customers can see if they can switch to a standard credit meter – this will give them access to the cheapest energy deals on the market and potentially save them hundreds of pounds a year.