So many ways to pay: a look at our increasingly cashless society

  • Payment
  • July 17, 2014
  • Skye Wishart
So many ways to pay: a look at our increasingly cashless society

Having cash in the wallet is an increasingly rare phenomenon for many Kiwis. So is throwing your wallet into the bin in favour of using your phone or a digital currency an option in New Zealand? And what’s 'coming soon'? We’ve cherry-picked a few interesting developments in the payment space. 

Dongles

Plugging something into your mobile phone and getting customers to swipe a card turns a mobile into a terminal. There are many examples, like Square, BNZ’s Payclip, Swipe HQ Checkout and PayPal Here, but Derrick Olivier of Sush mobile says they have dated.

“Square would have worked two or three years ago when it launched in the US, but tech has now surpassed it so it’s redundant. It’s so much easier to do payments online. The dongle is great if you are doing a one-off, but there’s still uncertainty for customers on whether they will trust it. But if you pay with iTunes, a Google account etc, it’s super easy for a customer. You can have an in-app set up,” says Olivier.

This redundancy was the case for Swipe HQ Checkout, a virtual credit-card terminal with a dongle attached. It was launched in 2012 and created by Kiwi cloud-tech company Optimizer. Now, it has been reworked as Swipe HQ which is basically a “pay me now” link in an invoice where payments can be made instantly—and it’s been recently acquired by Xero.

According to Kiwibank, chasing debtors costs the average New Zealand business $1,808 per month or $21,699 per year. So it's no surprise the banks are promoting these instant payment options. But many of them are online only, with Kiwibank offering Fetch payments and Westpac offering its Get Paid app.  

Mobile peer to peer payments

The banks have it all. Bump and Pay has been available for TSB customers for a couple of years now, where you set up the payment and tap phones together. With the ANZ GoMoney app, you can pay someone using just their mobile number, which is convenient when you don’t have their account information. ASB’s app allows users to pay to a Facebook friend, to mobile or email, and BNZ lets you pay TradeMe sellers.

Mobile point of sale 

NFC-enabled credit or debit cards are commonplace in New Zealand now, and a range of telcos and banks have dabbled with digital wallet trials (Vodafone, BNZ and Visa have SmartPass, which will allow payment through a smartphone app and an NFC-capable phone (Vodafone has plans to expand the service to loyalty cards, security passes and tickets); Telecom and Westpac have been trialling a service with Auckland Transport; and 2degrees and Snapper partnered to use NFC-enabled phones to pay for transport in Auckland and Wellington. 

ASB Paytag is on trial now and set to be launched in September. It’s a sticker that has NFC capability which can be used with Visa’s Paywave technology. You stick it on your phone, which is great if your phone’s sim doesn’t already have it, and it acts just like your paywave-enabled credit card, which allows users to swipe to pay without a pin for purchases up to $80. 

In April 2012, Paymark announced its intention to set up a joint venture with Vodafone, Telecom and 2degrees and become a trusted service manager (TSM). According to Stuff: "The TSM plays a crucial role as an impartial broker setting up business and technical connections between all the players involved. Unlike highly fragmented overseas markets, New Zealand's joint venture means there should be an open ecosystem where everyone can use the infrastructure." 

At this stage, that joint venture hasn't happened and as it says on the website: "​We are working to introduce the TSM services as quickly as possible with a lot of activity happening this year, however it is too early to give a precise date." It's thought some of the big parties have pulled out. 

Australian financial institution CUA has just launched an HCE (host card emulation) app, which means that the NFC capability doesn’t have to be programmed into your sim card or into a sticker. It’s hosted on the cloud so all you need is an app where you wave the screen over the paywave terminal. It’s a first for the Asia-Pacific region.

Mobile commerce

Westpac partnered with Mastercard to launch Masterpass in New Zealand in April, a platform that stores customers’ card and shipping details, and they can use it to pay on many Masterpass merchant sites

Olivier says a great innovation to reach our shores is Uber, which has rolled out internationally and is now in Auckland. “You don’t even have to choose what to pay, it’s assumed to be $30 because it’s generally within city limits. It’s seamless – you open up the Uber app and request a cab. You get in, and don’t even touch your phone. The app pays the taxi driver when it recognises that the two of you are moving together. Then you get a notification after to rate the cab.”

And there's also plenty of action in this space when it comes to loyalty. Mojo coffee, Z coffee and Subway are examples of companies using digital loyalty card apps, where customers ditch the cards and/or cardboard and instead scan their phones after purchase.

Bitcoin

Bitcoins were created by a Japanese programmer in 2009 are not pegged to any official currency. They are bought and sold through online exchanges and, as Freakonomics showed, anyone who doesn't hate Bitcoin, seems to love it, in large part because the fees are much lower than credit cards. 13 million Bitcoins are in virtual circulation around the world and at the moment they're valued at just over US$8 billion (NZ$9.1b). Now, more than 30,000 business and charities around the world—including Virgin Galactic and Wordpress—accept Bitcoin payments.

Bitcoin is by no means mainstream in New Zealand, but last week Slingshot announced customers can pay their broadband bills with the digital currency, with a Bitcoin now link in the My Account section alongside the payment options of cash, cheque, bank transfer and credit card.

Bitmart is a Christchurch startup using the currency. In fact it claims to be “New Zealand's first online store dedicated to digital currencies”. It sells household consumables, snacks and electronics for bitcoins or New Zealand currency and there you can get a 500g packet of Chelsea sugar for NZ$3 or 0.0043 Bitcoins.

New Zealand’s first Bitcoin ATMs popped up in April this year. They’re inside the Mr Barber Shop on Auckland’s Queen Street, and are really a publicity stunt by local firm Bitto NZ, which buys, sells and mines (processes) Bitcoins.

Litecoin is the closest competitor to Bitcoin. It’s not yet as widely accepted by online stores, but is growing fast and is apparently cheaper and easier to process. There are many digital currencies in the world and Coin Market Cap tracks 200 of them, with the top five being Bitcoin, Litecoin, Nxt, Ripple and Peercoin. 

The future 

In the US, payment options are copious. PayPal, Google Wallet, Passbook, MasterCard PayPass, to name a few. In terms of checkouts, a recent Nielsen report out of the US says scanning bar codes and QR codes displayed on screens is the most popular way for smartphone payers to pay (45 percent). 37 percent tap their phones on NFC terminals using digital wallets, and 29 percent scan the QR codes or bar code using their device cameras.

Olivier says using QR codes to pay is huge in Japan, too.

He says retailers will soon be able to completely own the payment system. Customers will connect their credit/debit card to the app, go shopping at, for example, The Warehouse, and pay just standing in the store rather than at the checkout and walk out.

“They’re already doing this in the US with ‘self-checkout’, much like how they have them in Countdown here, someone will still be watching behaviours and there will be cameras. They’re using it at Apple stores to buy small items, you scan them with the iTunes app and pay with your account,” says Olivier.

Soon we’ll be able to use the fingerprint scanners to pay with your thumb within an app, he says, with the release of Apple's iOS8 opening up options for this technology. Even iBeacons could conceivably be used for payments, he says.

Google Glass could even be used as a way to pay the bills. Kiwi mobile payment developers Fiserv already have the software for it, even though Google Glass is not yet available to consumers. Payments can be made with a voice command, three gentle taps on the side of the device and holding the bill up to the glasses. Hopefully there won't be too many cases of people who start telling a story and mistakenly pay the power company. 

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