Retailbiz will be publishing a new monthly column from the Australian Retailers Association (ARA) executive director, Russell Zimmerman. In this first instalment, Russell discusses why it’s important for retailers to have a choice when it comes to payments.
As we move into the digital age and encourage new forms of innovative technology such as mobile wallets and contactless payments, maintaining consumer and merchant choice across all payment channels and environments is critical. For consumers, it’s important to know what system your tap payment goes through, and for merchants it’s crucial to have a choice in routing.
Currently, point of sale (POS) terminals only read the first contactless application on the chip and automatically route the transaction according to this priority, with very little option for retailers to channel payments through a less costly route. These contactless transactions on dual network cards take the choice away from consumers and merchants and make it more difficult to manage the costs associated with different payment products and networks.
Mobile payments also significantly impact the ability of merchants to choose the payment network that best suits their needs. In a mobile world, only one scheme application will be observable to the consumer or merchant for any given transaction, eliminating any existing network choice that they may have. These technology lockouts remove the consumer’s preference in seeing eftpos as an available choice in mobile payments, which does not currently occur.
On behalf of Australia’s retail merchants, the ARA runs the Australian Merchant Payments Forum (AMPF) to advocate competitive, innovative and consumer friendly payment options for the retail sector. Without open consumer payments and competitive domestic payment networks, merchant fees and consumer costs may rise.
The ARA does not believe the current process is effective and has estimated the additional costs to the economy when dual network card transactions are routed via the current system is in excess of $290 million. The ARA has recommended creating further regulation to facilitate choice and avoid technological lockouts as we move toward third party mobile wallets.
We are pleased to hear that ANZ Bank has agreed to route transactions on dual network cards via the eftpos network, and encourage other banks and financial institutions to allow merchants to route their transactions via the preferred network.
The ARA does not consider that the costs would exponentially increase from compliance if standards were introduced. Having no regulation or ineffective undertakings will have a far greater impact on the long term competitive environment for retail payments in Australia.
The ARA believes that unless dual network card provisioning is made simple to understand, unbiased and easy for the consumer to execute, the only networks represented within consumer wallets will be the more expensive networks.
Our preference is to provision eftpos tokens at the same time as provisioning any other payment network token. In addition, the ARA seeks either separate card art bearing the eftpos brand to be displayed within the mobile wallet, or distinct card art equivalent to eftpos branding alongside other payment network branding.
As part of our work we continue to meet with the government to lower costs for both the merchant and consumer through advocating for the acceptance of any payment system at a low cost.
Russell Zimmerman is the executive director of the Australian Retailers Association.
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