Online move a challenge for eftpos
The country’s once-vaunted eftpos system is facing a key test as network operator Paymark seeks to shore up support for online eftpos.
However, ANZ bank has questioned whether contactless eftpos cards may be more important to eftpos’ future.
Retail NZ spokesman Greg Harford said internet shopping and the popularity of contactless card payments had been driving consumers away from eftpos and towards other forms of payment. Paymark launched online eftpos in December to try to recoup ground lost.
Customers pay by selecting online eftpos on a shopping site, entering their mobile number, and then approving a purchase through a banking app on their smartphone.
The service can still be used only by ASB bank customers at a single online outlet, Mighty Ape.
But Paymark spokesman Paul Brislen said several retailers and one additional bank were now in the process of implementing online eftpos and should start offering the service this month.
Eftpos is popular with retailers as they don’t have to pay a fee for each transaction, whereas they pay a percentage fee whenever customers pay using the likes of Visa and Mastercard credit and debit cards.
Economic consultancy Covec estimated in 2015 that those ‘‘hidden’’ fees were costing shoppers $380 million annually and that figure could rise to $711m by 2025 if the switch away from eftpos continued.
Massey University banking expert David Tripe said most banks were now offering Visa or Mastercard cards, rather than eftpos cards, by default when customers opened new accounts.
Despite that, Tripe believed people would still be using eftpos in five years.
He agreed banks could be said to be facing a ‘‘prisoner’s dilemma’’ over eftpos.
That was because although they were individually rewarded by credit companies for processing payments and issuing other cards, those incentives might disappear and banks could be left in a weaker position if eftpos disappeared from the market altogether.
Paymark had a flop on its hands last year when the bank-owned company and its joint venture partners Spark, Vodafone and 2degrees pulled the plug on mobile payment company Semble. Harford said he was not aware of online eftpos being widely embraced by retailers but it was early days. ‘‘We expect retailers will be keen to take up the service as it is substantially cheaper for processing than online credit and debit card payments.’’
ANZ bank digital transformation head Liz Maguire said she believed online eftpos was trying to solve a problem that didn’t exist for consumers.
Paymark would be better concentrating its efforts on a contactless version of eftpos cards that could be used in shops, given the growing popularity of contactless payments, she said.
All eftpos terminals are due to be capable of processing contactless payments from the end of this month as a result of a mandatory security upgrade, though it will continue to be up to individual shop owners to decide whether they want to turn on that feature.
Brislen said the fact there had been no move to contactless eftpos to date was ‘‘purely a decision made by the banks themselves’’, as they were responsible for issuing cards.