Eftpos Payments Australia managing director Bruce Mansfield had a go at scaring his former employer Visa yesterday telling the Australian Financial Review EPAL is considering a solution for international transactions.
EPAL is currently piloting a new card containing chip technology, which basically brings it in line with Visa and MasterCard branded debit cards. Thanks to the Reserve Bank’s changes to interchange fees, and some smart marketing by the card schemes, Australia’s banks have ensured branded cards are now widely in circulation.
To really take on the card giants, EPAL has a significant journey ahead, with mobile payments planned for 2012, and online payments not on the roadmap until 2013.
Now that BPAY’s proposed MAMBO project is defunct, EPAL probably feels it has a little more time up its sleeve to get online payments right.
One of the reasons MAMBO received criticism was because it didn’t offer a real solution for international transactions, something eWise has been pushing for through the International Council of Payment Network Operators.
Watch out for PayPal
But it’s not any of these players that EPAL really needs to worry about. It’s PayPal and cash that will be its real foes.
New research conducted by Nielsen has found PayPal is the most popular payment option for online purchase, with 51 per cent of Australians surveyed having used the payment method to buy online, compared with 43 per cent for credit cards, 25 per cent using direct debit or transfers, and 24 per cent using a debit card.
For offline purchases, cash is the big winner, with 45 per cent having used cash, versus 33 per cent for Eftpos, and 32 per cent for debit cards. It’s here that you’d expect EPAL to have a real opportunity. A massive 85 per cent cite cash as the most regularly used offline payment method.
But that’s only half the story, since PayPal research shows cash is king predominantly due to a lack of choice.
Three quarters of Australians surveyed by Nielsen cite that they need cash for small items and close to half claim that some retail outlets only accept cash and that there are limits imposed by retailers on the minimum amount accepted on card transactions.
So EPAL will join Visa and MasterCard in taking on cash. EPAL’s decision to fund its new businesses with scheme fees charged to both issuing and acquiring banks is an experiment that has raised the ire of smaller retailers that expected banks to pass on the new fees.
Getting cash users to shift
EPAL seems hopeful that its decision not to charge fees for transactions valued under $15 will encourage typical cash users to switch to Eftpos, but that assumes more retailers come on board with contactless payments, and banks and PayPal don’t deliver their own alternatives at the point of sale.
Next week the Commonwealth Bank will reveal its latest offering in the mobile payments space. The bank has previously said it is evaluating contactless mobile payment options, but it is also likely to deliver some sort of peer-to-peer payments solution, similar to that already offered by PayPal and ANZ.
With ANZ’s technology focus shifting away from single-market solutions such as its GoMoney service, and towards initiatives that it can deploy region-wide, the local mobile payments market remains somewhat open to competitors.
Google Wallet, and, as Jason Bryce discussed last week, Apple, are the two players to watch closely.
If one brand can get it right, the research points to Australians embracing it wholeheartedly. According to PayPal, 40 per cent of consumers want fewer, or only one payment method that would make it easier for them to keep track of how much they are spending.
The organisation that can deliver real-time payments and account balance data, combined with offers and convenience at the point of sale, could shift the entire market.
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