WHETHER you’ve tapped your debit or credit card, watch or smartphone – there’s a high chance you’ve made a contactless payment in recent months.
The use of ‘tap and go’ payments have sky-rocketed in Australia in recent years – as a country we now tap away more than $2 billion a week with the bulk of transactions under $50.
The method is proving so popular Reserve Bank figures show cash usage and ATM withdrawals have slumped to their lowest levels in 15 years, with entrenched tapping habits meaning an increasing number of customers avoid cash-only businesses, among them food and small agribusinesses.
Research by PayPal Australia shows a quarter of Australians now refuse to shop at cash-only businesses. The research showed consumers now expect the same level of technology from their local market stall as they experience at leading retailers and that level of expectation can be challenging and expensive for Aussie small businesses.
Baking Industry Association executive officer Tony Smith, Sydney, said bake houses around the country have had to adopt ‘tap and go’ payment systems to keep customers loyal.
“There’s a few bakeries digging their heels in but the majority have realised they’re either going to have to comply with what the customer wants or they’re going to end up struggling,” Mr Smith said.
In the past, the costs associated with running an eftpos retail terminal were hard to justify for small businesses selling low-cost goods. But a number of options have emerged outside the big four banks which offer a cheaper, flexible contactless payment solutions, including Square, PayPal’s ‘Here’ device, plus Apple Pay and Android Pay.
For example, irrespective of the size of the transaction Square charges clients 1.9 per cent per tap. There are no sign up fees and no monthly fees. Business running eftpos machines are typically charged a surcharge of between 1.3pc and 1.5pc plus fees to installation, service and merchant fees.
Mr Smith said increased competition had enabled many cash-only businesses to make the switch.
“There’s now plenty of choice. It’s safer and easier than handling cash which is great considering many banks are upping and leaving country towns.”
Square’s Ben Pfisterer said their product’s price point had opened new doors to businesses.
“A recent survey we conducted found 80pc of businesses using Square weren’t using a traditional terminal beforehand.”
But not everyone is getting on board.
A spokesperson for the Farmers Markets Association said farmers markets are still largely a cash-only shopping environment.
She said cash was still king among stall holders selling small quantities of fresh produce but those selling value added products often accepted eftpos payments.
“Regular stall holders review their options in line with trends but I believe people’s motivations to shop at farmer’s markets aren’t related to how easily they can pay for their goods – it’s more about buying freshly-picked, seasonal produce and meeting the farmer who grew it.”
The dramatic drop in the use of cash comes as the Reserve Bank speeds towards its release of its New Payments Platform which will allow individuals and businesses to make account-to-account funds transfers in real-time regardless of which bank a customer uses. Transfers will be able to be made at any time of the day or night, seven days a week, while the sender of funds will not need to know the recipient's BSB and account number, as a phone number or email address will be able to address a payment.
