New Zealand has been a world leader in terms of digital payments for more than 30 years but today that lead is under threat, if we can say it exists at all.
Thirty years ago, we embraced the EFTPOS network wholeheartedly with retailers, banks and customers alike flocking to the service. Instead of cash registers full of change, cheques that may or may not bounce and credit cards used for special occasions, New Zealand jumped into the world of EFTPOS payments like no other country.
For years, Kiwis have been proud of being a world leader in terms of payments. We could carry a single card and buy stuff at a time when most of the world was still making change or leaving tips. For Kiwis, the shopping experience was about the purchased product, not about how it was bought and we were almost unique in that.
Today the world is moving on, but New Zealand is yet to fully embrace this “post-plastic” world. While other countries are making the small leap from cash and cheques to the kind of digital transactions we were used to decades ago, some are making the larger leap to app-based payments that allow users to leave their wallets behind and just rely on the apps developed by banks, coupled with the inbuilt security and privacy of Google or Apple products.
New Zealand is starting to follow suit, but we still have a long way to go, mostly because we’re all quite comfortable using cards for payments, so why change?
The answer is twofold – ease of use and putting the retail customer back in charge of their own banking and shopping needs.
While shopping in traditional stores has been digital via EFTPOS for a long time, COVID has shown us that we need online retail to catch up. For most online retailers the only option is to either require all customers use credit cards (not always something customers are happy to do) or to offer a clumsy bank account transfer solution. But at Paymark we realised there were other ways to deliver payments via mobile banking apps that would both reduce retailer costs and also ensure customers decide which fees they would pay.
Internationally there are numerous ways to pay digitally that we simply haven’t seen here, and they are all based on the principles of “open banking”. Instead of banks holding your data and insisting on processing payments and transactions within their systems, open banking allows retailers and customers alike to plug in their own apps and resources into the banking sector both securely and transparently. That means new and exciting propositions are being made available in ways that traditional banks may not have thought possible in the past.
Take Swish – an open banking app in the Nordic countries where users can pay instore using QR codes they scan with their phones or via Bluetooth, the short-range wireless capability built into most modern smartphones. Swish also allows users to pay other types of bills – including person-to-person transactions for those times you need to pay half the bill.
Or look at Wechat and AliPay which between them account for half of China’s online transactions. China leapt from a cash-based society to digital via QR codes and is now looking at facial recognition as a mechanism for enabling payments.
Locally we’re also looking to the future of digital payments and a post-plastic world.
Online EFTPOS, for example, allows users to buy products online using their own bank accounts but doesn’t require customers to know that long string of numbers on the front of their payment card.
Instead, customers only need to know their mobile phone number and have their bank’s app installed. Our retail partners then add Online EFTPOS as an option at check out. Customers get notified on their mobile device and can authorise the payment themselves and the money goes direct from their account to the retailers. It costs less than using a credit card and, for those who are on a budget or who don’t like to use credit cards, it means they don’t miss out on the rise of the online shopping.
Customers don’t necessarily want a wallet full of bits of plastic all doing basically the same thing, when they have a smart device in their pocket (and on their wrist) that can both protect their personal data and provide a better customer experience.
Retailers also don’t want to go back to cash and cheques but also don’t want high fees – so enabling third party apps will help drive more competition into the market and allow customers and retailers alike to benefit.
Here at Paymark we’re eager to see what the next wave of payments looks like and to play a part and who knows. Perhaps the next big banking advance will come from New Zealand and be adopted globally.