This morning I awoke to the sound of Radio NZ news in attack mode launching a full on hatchet job on Mastercard. What had Mastercard done that was so bad? Well nothing. Nothing at all.
In November last year (1) the consortium of ANZ, EFTPOS NZ and MasterCard announced the launch of MasterCard PayPass in New Zealand. PayPass is a Near Field Communication(NFC) capable card (think "Snapper card") and enables payment for goods without having to use the magnetic stripe or chip on your card. No PIN number is required for low value purchases, which means the transaction times are super quick, typically somewhere in the vicinity of 300ms - 500ms depending on the volume of data that is transferred. Part of the announcement was that PayPass terminals would be installed at Eden Park and Westpac stadium in time for the Rugby World Cup. Despite the deal to launch NFC terminals in stadia for the RWC now being over four months old, Radio NZ thought they were onto a winner, boldly claiming that RWC patrons would "have to have to use cash or buy a new Mastercard prepaid card" for purchases during an game. I'm sorry Radio NZ, what was the news again? It's obviously a slow news day when your lead story is a rehashed four month old story that does nothing but spread FUD. I guess impartiality wasn't in the vocabulary today.
Radio NZ then called upon Massey University senior lecturer in banking Claire Matthews to comment "New Zealanders have taken to eftpos with such delight and make such great use of it, that to try and persuade them to use something else which doesn't offer any significantly better convenience or efficiency - there's simply not the argument for them to use it.". About now might have been a good time to do what a journalist does well and ask a question, such as " why do we not have EFTPOS in stadia today?".
Here in New Zealand today if you attend an event at a major stadium you'll find it's still very much cash environment. Despite our love for EFTPOS it's not commonly found. Why not you ask? The simple answer is that the transaction times are considered to be too slow and will create bottlenecks. This is a view that is certainly open to argument, with the average time for an EFTPOS transaction being in the vicinity of 15 seconds. Regardless of whether or not you think that's a problem it's an issue we just have to accept - and have done, as the lack of EFTPOS terminals at most major events will be readily apparent to anybody who regularly attends. Instead of handing over their plastic at the till, people either bring cash, or queue at ATM's inside the stadium and pay for their hotdogs and beer with cold, hard cash.
One interesting piece of history for buffs is that when the Westpac Stadium in Wellington was opened in 2000 it featured Visa Cash terminals at every kiosk. Visa Cash was a prepaid chip card that required no PIN or signature, however the hardware was withdrawn after the Visa Cash product failed to gain traction in the global marketplace, and was replaced by trials of NFC cards that began around the same time.
Here in New Zealand ANZ bank have been issuing NFC based MasterCard cards since mid 2010 and launched these officially in November 2010. A growing number of retailers now feature NFC capable EFTPOS terminals, and if you stand at a McDonalds store for long enough you will see probably see somebody using one. While not commonplace yet in the New Zealand market, the Australian market now has 5.3 million PayPass cards, and over 35,000 retail locations with PayPass enabled terminals. By October 2012 all Mastercard cards issued by banks in both New Zealand and Australia will feature PayPass, and by 2014 all EFTPOS terminals in both countries must be upgraded to support NFC cards. Sources tell me that ANZ will very shortly begin issuing NFC cards as standard, and that at least one or two other bank in New Zealand will roll out NFC cards over the coming months meaning there will be a growing numbers of cards in regular use by the time the RWC starts.
The "new" NFC terminals were installed late last year at both Eden Park in Auckland and Westpac Stadium in Wellington. If you're lucky enough to already have a NFC card you've probably already used it. If you had were expecting some flash new terminals to be installed just in time for the RWC you'll be sorely disappointed. The very same infrastructure and payment methods that are in place today will be exactly how things are during the RWC.
The hatchet job on Mastercard continued with blogger Lance Wiggs launching a scathing attack saying the decision is "stupid". Comments such as the one from Lance saying that MasterCard need to "roll out the NFC/EFTPOS terminals across New Zealand so that tourists and locals alike can experience the technology" shows a lack of knowledge of the product and industry. NFC terminals are now reasonably commonplace in NZ, with a huge number of Ingenico terminals having been deployed in recent months as retailers upgrade to new EMV version 6 capable terminals as required by the 1st June 2011.
Issues were also raised in the media as to why Visa cards couldn't be used. In Part ANZ and MasterCard as RWC sponsors obviously see value in selling their brands, however more import is a key issue that Visa's PayWave NFC cards have not yet been launched in New Zealand. Using something that doesn't exist in our market isn't easy!
In recent months there have been some very exciting developments in the NFC field. Cellphones with NFC capabilities have been trialled meaning that your cellphone becomes your wallet. Want to see your current account balance or transaction history? It'll all viewable on your phone screen. NFC is the future of payments, and the capabilities of such an exciting technology are very cool.
It's been a long time since I've heard a rehashed news story about payment terminals that were installed months ago, NFC credit cards cards that are already in use by thousands of New Zealanders (and not to mention foreign tourists who will visit) and shock words such as "paying by cash" cause such a fuss!
Disclosure: Before somebody flames me I neither work for, or have any association with any bank, credit card company or terminal vendor.
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Comment by sioux, on 14-Apr-2011 00:36
Hi, can you, mastercard or anz answer these simple queries. 1. Will our un-used money be refunded at no cost to us? 2. Are the cards usable at any other outlets after the rugby world cup is over? 3. Will mastercard require us to sign up to any of their other products before or after purchasing this *wondercard*. 4. Where are these terminals already in use? i've heard of snapper but not these ones. cheers
Comment by Tom, on 14-Apr-2011 02:19
Well there's probably a lot of Aussies heading that way with Visa Paywave cards. Will they work?
Comment by kiwitrc, on 14-Apr-2011 06:42
Excellent, informative breakdown of some half arsed reporting. Thanks.
Comment by bnapi, on 14-Apr-2011 20:20
Isn't having no pin number for low value purchases a security risk? Is this disabled by default?
Comment by juha, on 18-Apr-2011 09:36
Was thinking how slow EFTPOS can be, especially with chipped cards, only yesterday...
Comment by Ben, on 31-Aug-2011 13:41
Thank you for your interesting post.