Retailers rethink their use of Paywave technology (filmed in 2018)
Kiwi businesses are finding other ways to provide the convenience of a Paywave-like system to their customers to avoid paying tens of thousands of dollars in bank fees.
Iconic Wellington ice cream chain Kaffee Eis was the latest business to announce it was dropping the payment system after discovering it had cost them more than $20,000 in fees over the past 16 months.
General manager of Mojo New Zealand Katy Ellis said they had developed a special app for their cafes to allow customers to pay with their cellphone at the counter instead.
"If we rolled [Paywave] out it would be over $100,000 a year for us, probably $150,000," she said.
The merchant fees are passed on by banks, meaning for every tap of the Paywave machine, retailers must pay a percentage of the sale price. Straightforward Eftpos transactions have no fees.
Ellis said the coffee chain had Paywave in a couple of its locations where customers were particularly reluctant to let it go, but at most of its cafes it allowed customers to pay with the specially-designed app.
Mojo developed the phone app in 2015 so customers could load credit on to it and scan their phone at a generic QR code scanner at the counter when paying.
"It makes it really easy for customers ... they don't have to worry about having their wallet with them," Ellis said.
She said 10-20 per cent of their sales were made through the app, and it had been downloaded 25,000 times since they launched it.
It was "quite a big commitment" to build an app, but they would prefer to spend the $100,000-$150,000 that would have gone on to Paywave fees on improving the app and making it better for users.
Mojo trialled Paywave for a period but decided not to roll it out across its locations.
"Some people would say it generates quicker sales and things like that, but we haven't really seen much evidence of that."
General manager of Mojo New Zealand Katy Ellis said if they were to use Paywave it would cost between $100,000 and $150,000 per year in fees. Photo / Supplied
Kaffee Eis manager director Karl Tiefenbacher said yesterday the costs of making Paywave available for customers outweighed the benefits.
They decided "the second that we saw the numbers" they would get rid of the service.
"A lot of people realise that merchants are having to hold the cost of Paywave and that it's significant."
Retail NZ's general manager of public affairs Greg Hartford said many businesses pay a single rate for all credit and contactless debit transactions, meaning they are charged the same whether the customer was using a credit card or not.
"Unbundled pricing, where the merchant pays 'interchange' plus a 'bank acquiring fee' is becoming more common, and typically means that merchants pay less for accepting contactless debit," he said.
"Retail NZ does an annual payments survey, which has previously shown that New Zealand merchants pay substantially more for credit and contactless debit transactions than merchants in Australia and the UK.
"Visa and Mastercard made some reductions to maximum interchange rates in April last year."
Retail NZ is currently doing research to figure out the impact of this on the market.
