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Kyanar
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  #2516418 2-Jul-2020 19:52
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BlinkyBill:

 

Paywave infrastructure is a capital cost + relatively small maintenance. The capital cost is sunk. The relatively small maintenance cost is a rounding error on large banks operating budget.

 

The charges for payWave are a ripoff goldmine for the providers, and there is no need for it. These charges are banned in Australia and there is no reason why they shouldn’t be banned here also.

 

 

To address a number of incorrect statements in your post - the reason Australia differs from New Zealand here is that eftpos (Payments Australia Limited) actually does charge an (admittedly quite small - $0.15 per transaction or so) interchange fee on swiped transactions, and as a result has an actual revenue model, allowing them to invest in new technology, such as creating an EMV (Chip and PIN) application to install on multi-network cards. When you get an eftpos (not scheme debit) card in Australia, it supports contactless because it has the eftpos "CHQ/SAV" application loaded onto the chip, and can communicate with contactless readers. This means an eftpos card can be tapped for a negligible $0.15-$0.30 transaction fee.

 

EFTPOS (New Zealand Limited) and Paymark do not have an EMV application that can be loaded onto a chip/NFC card to communicate with contactless readers. As a result, anytime a card is tapped, it must traverse scheme debit rails. This wouldn't be so bad since contactless payments via scheme rails are actually heavily discounted compared to inserted except for the next two issues.

 

Blended transactions. In both Australia and New Zealand, banks push blended rates where all credit and debit transactions are charged at a flat percentage rate. In New Zealand, banks are required by the Commerce Commission to also offer what's called Interchange Plus - this is where transaction fees for any transaction are the published interchange rates from the scheme network plus a profit margin specified in the merchant agreement. The issue there is that an interchange rate for a tapped Mastercard in New Zealand could be 0.50% (for a credit transaction), or it could be 0.40% (for a debit transaction), or who even knows what it would be if it's a foreign card. And if that same card is inserted, it could be 0.90% (standard credit), 0.50% (standard debit), 2.05% (elite credit), or 1.30% (premium debit). Due to this complete mystery of charges, most merchants say screw it and choose to pay a blended rate of 1.5% or whatever for all cards except inserted or swiped cards with CHQ or SAV selected.

 

In Australia, there is no requirement to offer interchange plus pricing, so banks only offer blended rates of usually around 1.5% to anyone without enough size to force the bank to offer a custom agreement. Unlike New Zealand, banks include eftpos (CHQ and SAV) in these blended rates, meaning that the bank charges 1.5% on a transaction where the issuer only receives $0.15. Square and PayPal at 1.75%+ are even more usurious. As a result of this, though, in Australia no merchant only accepts eftpos, but credit is also accepted whereas NZ quite often is "EFTPOS only". If the merchant in NZ chose interchange plus, they would actually be better off getting all credit card users to tap and forbidding inserting the card!

 

Multi-network cards. In Australia, since contactless cards can also present the eftpos CHQ/SAV application, it is possible for the acquiring network to perform something called "Least Cost Routing". This is where when a card is tapped, the terminal determines if it is a debit, credit or eftpos card, and if the card is a debit card whether the transaction can be halted and redirected off scheme rails and onto eftpos rails. This obviously only applies where the acquirer fee is not blended, and most acquirers also block LCR from being enabled if automatic surcharging is enabled. This is even possible with Apple Pay.

 

Interchange also funds another key part of the system as well - fraud protection. For an in-person transaction which it is determined was not authorised by the cardholder which was tapped or inserted, the cardholder is not liable for that cost and neither is the merchant. The cost of in-person card fraud is borne by the banks, and spread across every transaction, everywhere. This is part of why noone in the world has regulated interchange down to zero. It also covers the cost of ongoing research and development for things such as tokenization (the underlying technology behind Google Pay and Apple Pay).

 

And to the last incorrect statement - there is absolutely no additional charge for using Contactless. And even if there were, Australia has absolutely not banned it (so stop talking about it before CommBank hears and implements one). As stated above, contactless is actually cheaper for the merchant if they aren't on blended rates. The (totally wrong) perception that there is some sort of "paywave fee" is because if the card was inserted in NZ and the customer chose CHQ or SAV, it would have cost them nothing over EFTPOS rails, but because they tapped and NZ has no contactless EFTPOS or LCR, it was sent over the (probably blended, because merchants never choose interchange+) scheme rails.


davidcole
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  #2516431 2-Jul-2020 19:55
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jonathan18:

 

dafman:

 

1st world problem. Paywave saves you what, three valuable seconds over swiping and entering a 4 digit PIN for eptpos?

 

 

Paywave may not be a necessity but certainly a feature I'd hate to go without, and would appreciate being rolled more widely; already I've noticed a number of retailers that have removed the feature over the past few weeks.

 

For me, it's not so much the saved time but the convenience provided by GooglePay - for example, not having to carry my wallet with me at all times means that I know I can pop into the supermarket on a walk. (I'm so attached to this I'd be unlikely to switch my credit card to a bank that didn't support GP.) 

 

 

because if this, I wish shops would put on the door if they have payWave or not.  Would certainly help if out without a wallet and expecting to use a phone or the like.





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antonknee
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  #2516484 2-Jul-2020 20:30
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Love contactless, hate retailers who don’t offer it. It’s 2020, not 1987. Next thing I’ll need to get a cheque book out at the shops.

Get with the picture, actually understand your payment provider’s fees (what @Kyanar said) - a crucial part of being in business you would think - and stop being annoying.

Contactless us incredibly convenient, incredibly fast, and incredibly secure.




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sbiddle
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  #2516496 2-Jul-2020 21:05
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The biggest issue is that interchange rates in New Zealand are too high, and it's pretty clear now the Government has no interest in doing anything about the issue which is in effect creating a huge money go round and ripping off NZ consumers.

 

Until the Government (well Minister Faafoi) actually decides the issue is important nothing will change. Rates need to be regulated like Australia.

 

 


Geektastic
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  #2516506 2-Jul-2020 21:53
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dafman:

 

1st world problem. Paywave saves you what, three valuable seconds over swiping and entering a 4 digit PIN for eptpos?

 

 


It saves me picking up other people's germs etc be they covid, the common cold, unwashed hands from a toilet visit or whatever...






eracode
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  #2516540 3-Jul-2020 04:11
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Never in the field of human finance was so much paid by so many to so few.

 

Also, @Geektastic - your masseuse went contactless? How did that work?





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BlinkyBill
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  #2516541 3-Jul-2020 06:13
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I was wrong when I asserted contactless payment fees were banned in Australia. Credit card, eftpos and atm fees are restricted by legislation there, but not contactless payments. The RBA is considering similar restrictions for contactless, but nothing is in place; my memory had it that this was done, but I was wrong.

 

I stand by my assertion that these charges are a ripoff goldmine for the providers, relative to the costs, and there is no need for it.





BlinkyBill


 
 
 
 


Bung
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  #2516559 3-Jul-2020 08:39
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eracode:

Never in the field of human finance was so much paid by so many to so few.


Also, @Geektastic - your masseuse went contactless? How did that work?



She waves her hands, Geektastic shivers, job done by anticipation.

Geektastic
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  #2516565 3-Jul-2020 08:53
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eracode:

Never in the field of human finance was so much paid by so many to so few.


Also, @Geektastic - your masseuse went contactless? How did that work?



Perhaps that explains the blindfold....! 😮





pom532
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  #2516571 3-Jul-2020 09:05
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Is there any mention of NZ introducing paying by QR code from your phone?


Handsomedan
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  #2516625 3-Jul-2020 09:36
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pom532:

 

Is there any mention of NZ introducing paying by QR code from your phone?

 

That's been talked about for a while by various providers, but the banks won't talk about it publicly (and they keep discussions on that kind of thing tightly under wraps internally too). 

 

My guess would be...no





Handsome Dan Has Spoken.
Handsome Dan is also still somewhat perplexed...


wellygary
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  #2516628 3-Jul-2020 09:42
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Geektastic:
eracode:

 

Never in the field of human finance was so much paid by so many to so few.

 

 

 

Also, @Geektastic - your masseuse went contactless? How did that work?

 



Perhaps that explains the blindfold....! 😮

 

 

 

No, that's the Covid mask, you're wearing it wrong,  :)


wellygary
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  #2516635 3-Jul-2020 09:51
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pom532:

 

Is there any mention of NZ introducing paying by QR code from your phone?

 

 

As mentioned above, pretty much no, 

 

QR payments came about as a solution so Tech companies (mainly in China) could develop cheap and easy payment systems to attract non-banked retailers into their networks, POS terminals are expensive, QR on paper is cheap.... they filled a void that does not exist in the West.

 

 

 

 


Handsomedan
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  #2516663 3-Jul-2020 10:37
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wellygary:

 

As mentioned above, pretty much no, 

 

QR payments came about as a solution so Tech companies (mainly in China) could develop cheap and easy payment systems to attract non-banked retailers into their networks, POS terminals are expensive, QR on paper is cheap.... they filled a void that does not exist in the West.

 

 

On that - I was amazed to hear from a colleague who travelled to China a couple of years ago that even street beggars had WeChatPay - couldn't give them cash, as it was of no use - had to scan their QR code...





Handsome Dan Has Spoken.
Handsome Dan is also still somewhat perplexed...


Kyanar
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  #2516738 3-Jul-2020 12:54
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BlinkyBill:

 

I was wrong when I asserted contactless payment fees were banned in Australia. Credit card, eftpos and atm fees are restricted by legislation there, but not contactless payments. The RBA is considering similar restrictions for contactless, but nothing is in place; my memory had it that this was done, but I was wrong.

 

The RBA is considering no such thing. Again, contactless payments are not a separate category of payment - they are either scheme debit/credit, or they are eftpos. Unlike in New Zealand, there is no discount or a contactless transaction vs a swiped or dipped transaction, they are priced the same. The interchange on contactless transactions is regulated exactly the same as every other transaction type, because it is a transaction same as any other.

 

Also, ATM charges are totally unregulated. Simple competitive pressure was what caused the banks to drop those.

 

Last but not least, eftpos is exempt from the interchange regulation. EPAL is permitted to charge whatever they want, just like Amex.

 

I stand by my assertion that these charges are a ripoff goldmine for the providers, relative to the costs, and there is no need for it.

 

Conservative estimates by the card networks place card present fraud (which is borne by the acquiring banks) at 2% of all transaction volume. Without the acquirers being able to charge for the transactions, that would have to be paid by the merchant instead. NZ's 2.1% interchange rate is extremely high, and should be capped down at the 1% or so that Australia's is, but they certainly aren't the "goldmine" you claim it to be.

 

Before making further statements about the topic, you should probably read up on it more. 


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