Pros and Cons of payWave and PayPass fees in New Zealand
With Retail New Zealand last week saying to media that banks and credit card companies are charging Kiwi retailers too much for contactless transactions, a debate has sparked over whether moving to a contactless payment system is right for a business in this day and age. Fast-food giant Burger King is the latest company to ditch payWave due to the “significantly higher” fees the company feels they are facing for using the system, especially compared to contactless fees oversees.
As a veteran of the point-of-sale industry with 19 years of experience – and one of the most trusted experts on EFTPOS NZ has to offer – POS Technology are well-placed to weigh up both sides of the payWave/PayPass argument and judge whether going contactless is worth it for businesses in New Zealand.
What are the fees for contactless payments?
Fees depend on banks and providers, but research found that New Zealand retailers are paying on average 1.2 per cent for every contactless payment they process, with some retailers paying up to 3.5 per cent according to Retail New Zealand. Some businesses have started to move these costs onto the customer by introducing surcharges on contactless transactions, effectively discouraging them to pay via payWave/PayPass, while other companies such as Burger King have ditched it altogether.
Why are businesses moving to contactless payments despite the fees?
Regardless of the fees that are charged on contactless payments, their use in New Zealand has increased to an average of 25 million transactions per month, almost doubling since this time last year. While swiping used to be more common at POS terminals, it now seems that we are heeding the advice of Dora the Explorer: “Swiper, no swiping!”
More New Zealanders than ever are going contactless, and the advent of apps such as Apple Pay has allowed cardless transactions that still attract the same contactless fees for retailers.
Furthermore, research undertaken by Paymark and TRA showed that retailers who have chosen to use payWave and PayPass in their stores have enjoyed double the sales growth of those who haven’t, and double the overall number of transactions. This perhaps is due to the size of the companies choosing to use contactless payments as opposed to those not as, on the whole, most large retailers allow for payWave and PayPass
Is allowing for payWave and PayPass worth it?
At the end of the day, the question of whether allowing contactless payments is worth it at this stage depends entirely on your business’s individual characteristics and needs. For larger retailers where payWave will increase your customer base by allowing more transactions to take place, there’s an obvious benefit, however it will still have to be weighed up against the costs of fees. On the other hand, for smaller retailers with little potential for growth in their customer base, payWave is unlikely to bring economic benefits to your business.
However, two factors loom large for the future of NZ retailers when it comes to payWave. Firstly, as indicated by former commerce minister Jacqui Dean, regulation may be on the way for contactless payment fees. Secondly, and more importantly, the rate at which New Zealanders are moving toward contactless is increasing rapidly, and there is little doubt this is the way of the future, regardless of the current rate of fees.
If your business is looking to make a step toward the future by purchasing payWave/PayPass-enabled POS terminals, or want to upgrade your POS system in any way, the team at POS Technology are experts in all things POS-related and able to deliver state-of-the-art POS products all across the Wellington region! Contact us now to upgrade today!