Contactless eftpos on the cards for retailers

Worldline plans to launch contactless eftpos next year to cut costs for retailers and consumers. Photo / Emma Houpt

Payment provider Worldline (formerly Paymark) plans to launch its contactless eftpos method next year ahead of incoming legislation to control third-party access to consumer data.

The technology will let customers use their phones to store a digital eftpos card that stores loyalty cards and other data to simplify paying for items at the checkout.

Worldline chief sales officer Bruce Proffit said the company hoped to have the software on the market halfway through next year and will let customers use existing digital wallets on their phones to store payment information.

Proffit said current Paywave transactions comprised about 53 per cent of all electronic payments, and cost retailers anywhere between 0.5 per cent to 2 per cent per transaction in fees, with eftpos transactions making up just 23 per cent of transactions.

While loyalty card technology is expected to be out next year, he said identity verification information, for example for the purchase of alcohol, will launch in 2025.

He said current Paywave transactions cost retailers anywhere between 0.5 per cent to 2 per cent per transaction in fees and made up a significant amount of costs for retailers.

Worldline worked with KFC, Taco Bell and Pizza Hut owners Restaurant Brands to develop and test the technology.

Law changes

The new system comes after last year’s Retail Payment System Act, which requires the Commerce Commission to monitor retail payment systems and regulate payment networks including Visa and Mastercard networks.

According to the act, the Commerce Commission can issue retailers with surcharging standards for any network to make sure surcharges on transactions reflect the actual cost of the transaction.

Proffit said the digital eftpos system will store customer data like retailer loyalty cards and identity verification information, which will be regulated by the incoming consumer data right (CDR) scheme.

Commerce Commission chairman John Small. Photo / Mark Mitchell

The Herald reported last year that the CDR means companies will have to meet certain requirements and be accredited to access consumer data.

This month, the Commerce Commission announced a desire to “remove barriers to more innovative payment options” for Kiwis to make in-person payments directly between bank accounts as a low-cost alternative to current card payment options.

Commerce Commission chairman John Small said the approach was complementary to development of a CDR regime.

“We can require banks to provide access to the necessary systems ahead of CDR legislation going live, so that the sector is ready to meet the expectations it sets to deliver benefits to all New Zealanders,” Small said.

He said: “Bank transfers are typically one of the lowest cost payment options and if it were safe and easy for Kiwis to pay this way in-person, merchants would benefit from faster, cheaper payments.”

Proffit and Small said eftpos use was declining due to consumer preferences and fewer eftpos cards being issued by banks, even though it was cheaper for retailers and customers.

Small said a designated bank transfer network, like QR codes used overseas, alongside the commission’s regulatory powers would “create a more level playing field for new entrants”.

The draft CDR bill is currently in consultation with the Ministry of Business, Innovation and Employment (MBIE).

The framework is meant to give consumers access to a wider range of products and services by promoting data portability.

How it works

Proffit said Worldline’s digital eftpos cuts costs for retailers who will pay a flat rate of $18 a month.

The system replicated existing payment methods like Apple Pay where a customer made a contactless transaction using a digital card on their phone app at an in-store eftpos terminal.

But each transaction will still come at a cost.

“Retailers or consumers will have to pay for contactless transactions.

Proffit said Worldline is currently in the process with banks to decide how much charges to customers will be.

He said whether extra costs were passed onto customers depended on retailers, but the company expected costs to be affordable.

“We want to ensure a low-cost, domestic debit network still exists in NZ to ensure transactions stay in NZ.”

He said the company opted to use existing digital wallet apps, with access to shared customer biometric data already on a customer’s phone.

Restaurant Brands chief information officer Kenny Thein said Worldline’s current online eftpos system led to a growth in eftpos, and the incoming process opened contactless transactions to customers without credit cards.

“The current eftpos system is not a nice experience,” he said.

First Retail’s Chris Wilkinson said the eftpos system was likely to be picked up by retailers if streamlined and cheaper for businesses.

“In a competitive environment, it’s great that there is increasing competition in this market. Businesses will be welcoming that but, it will need to have a discernible advantage for the businesses and the consumers,” Wilkinson said.

“Worldline is trusted by businesses and if it can develop a solution that is business-friendly, particularly retailer-friendly, that will give them some advantage because businesses have seen banks to be quite challenging in the way that they’ve dealt with them in the past.”

Alka Prasad is an Auckland-based business reporter covering small business and retail.