Maxine Elliot, chief executive of Worldline New Zealand. Photo / Supplied
It’s been five years in the making but within weeks customers of all four of the major banks will be able to make online eftpos payments to merchants who accept it cutting the potential payment costs to both businesses and consumers.
Worldline New Zealand - formerly known as Paymark - soft-launched the ability to pay via online eftpos in 2017 with ASB and Co-operative Bank on board.
Since then it has reached agreements with Westpac and the BNZ and now the last cab off the rank - ANZ - the country’s largest bank - will go live shortly.
“It’s been a long road,” says Worldline NZ CEO Maxine Elliott.
“We will now get to about 95 per cent of consumers in New Zealand and we have brought on a lot of merchants in that time as well.”
Some recent additions include PB Technology, Restaurant Brands - the owner of the KFC and Pizza Hut franchises in New Zealand, betting agency the TAB and Auckland Council.
Eftpos or electronic funds transfer at point of sale was first introduced to New Zealand in 1985 and became hugely popular to the point where most transactions instore were paid for using eftpos.
But rising fraud saw Mastercard and Visa launch cards with a chip and pin and then contactless payment technology. Until 2017 eftpos card users couldn’t use their accounts to pay online.
The Covid-19 pandemic has seen the use of contactless technology rise sharply as users moved to avoid touching pin pads.
Worldline data shows for the transactions which use its payment network the percentage of contactless instore debit payments has risen from 16.5 per cent to 30.9 per cent since January 2020 while eftpos has fallen from 31.4 per cent to 23.4 per cent. Debit card payments where you insert the card have fallen from 27.1 per cent to 18.6 per cent.
But high fees for using the contactless service have also meant it was a costly move for many businesses.
Six months ago the Government introduced a law to cap interchange fees which make up part of the contactless fee. It came into force last Sunday and means fees on credit card and contactless payments will be lower.
The changes are expected to save merchants $74 million each year, some of which the Government hopes will be passed on to consumers.
Consumers often get charged a surcharge for paying with their credit card online or instore and merchants face a risk of a chargeback - where the payment can be reversed by the credit card company.
Elliott said awareness of the ability to use online eftpos was still a work in progress.
“We rely on the banks and merchants to drive that. The likes of Auckland Council and PB Tech - they have been - because PB Tech doesn’t put a surcharge on our online eftpos product.
“They do on other payment products. They are actively trying to get their customers to use it.”
Merchants pay about 1 per cent of the transaction value for online eftpos - a revenue stream which is shared between payment operators like Worldline and the banks.
While charges for accepting credit card and contactless payments can be 1-4 per cent with hefty fees for smaller value transactions.
Elliott said currently online eftpos payments made up less than 10 per cent of online payments through its network.
“At this point it has been a lot of organic uptake. People just seeing it and giving it a go. And I think even the banks are surprised at how much uptake there is given there hasn’t been any marketing.”
But she is hoping now that all four of the big banks are on board there will be a “network effect”.
“The next phase is really building that momentum with consumers and getting the banks to help us do that because obviously it is using their banking app so they can access their customers.”
When you go online to make a payment consumers are asked how they want to pay. If they select eftpos they will then be asked which bank they are with.
They then need to type in their mobile phone number and a message will be sent through to their mobile phone banking app and ask for approval to make the payment.
“We basically are doing the translation in the background between your mobile phone number through to your bank account so it’s all secure via APIs into the bank. Unlike if you are using POLI where you are handing over your banking credentials.”
She said some merchants were seeing a significant take-up.
“Restaurant Brands ... they reckon they are getting new users, particularly those who either don’t have a credit card. Maybe you are a 17-year-old and don’t have a credit card and now you are able to use online eftpos to buy your pizza.”
She said one of the concerns was about how much it substituted people using their credit card.
“There is obviously some of that but there are also new markets that are opening up. It does depend on the demographics of the retailer. It’s got a long way to go.”
“Instore we have a weird dynamic in NZ. What we normally call eftpos was the old bank card that was an insert and swipe. So that if you insert or swipe your visa or mastercard or debit card that was all treated as an eftpos transaction. And so that was all free to the merchant and all processed locally here by Worldline.
“But once we moved to contactless, which of course during Covid has really risen fast, that all gets treated like a credit card transaction - so that’s why there’s been such a lot of interest in what are we going to do with payments because for merchants all of a sudden even if you are using your Visa or Mastercard debit card if you are contactless, it now gets sent out to the schemes and attracts a lot more charges and is a lot more expensive. Hence why the Government is regulating interchange.
“We have seen a massive rise in contactless over the last two years really and the resulting decline in our traditional eftpos and that’s costing business.”
Elliott said no one was interested in trying to invest in the old style eftpos card but now it had rolled out online eftpos it was looking at how to reintroduce the product instore.
“Now we want to take that the next step and say, ‘well how do we create the eftpos of the future?’ So take online eftpos instore and basically have a digital wallet which you would be able to purchase things using your bank account instore.”
They still have a fair bit of work to do to get this up and running.
“We are probably 18 months from a real commercial pilot but it’s working with all the partners that takes time. You can build the tech easily, it’s how everything works together.
“You have to figure out how you can tap your phone and all the issues around Apple and Google and then being able to use that on hardware that is already in the store so people don’t have to replace it.”
Elliott said it was then about how to issue the digital wallets and the role banks play.
“So there are lots of moving parts.”
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