Contactless is a technology that
can thrive if played and utilised in the correct manner. Yet
unfortunately too many markets appear to be too heavily focused on
the issuing side of the game and preoccupied on the form in which
the technology comes, which suffocates and prevents the technology
from flourishing into the game-changing tool it has been touted as
becoming.
However, Australia appears to be a
market that has the balance just right and MasterCard’s recent
announcement of its five-year roadmap shows how important the
technology is to the future of the payment landscape ‘Down
Under’.
Go deeper with GlobalData
More than 5.3m MasterCard PayPass
contactless cards have been issued in Australia and the technology
is currently accepted at 35,000 merchant locations, according to
MasterCard’s divisional president Eddie Grobler. The growth of
PayPass transactions grew 235% between June and December 2010 and
this figure is set to grow even further under MasterCard’s new
plans.
All MasterCard payment cards are
set to be PayPass-enabled by October 2012 and various merchants
such as taxis, newsagents, supermarkets, service stations, fast
food restaurants and cinemas will be required to deploy at least
one PayPass-enabled terminal during the next five years.
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By GlobalData“The set of changes outlined in the
roadmap will change the face of the payments industry in Australia
and bring a broad range of benefits across the financial sector,”
said Grobler.
Andrew Cartwright, country manager
for MasterCard Australia, claims the country’s contactless market
is more advanced than the UK in terms of adoption, as it has 8 out
of its 12 MasterCard issuing banks already supplying
PayPass-enabled cards. He attributes the growth of the technology
to the balance that has been found in the issuance and acceptance
of the technology.
Cartwright claims banks in
Australia were, and still are, hungry for innovation and thanks to
the contactless terminalisation that took place in merchants such
as McDonald’s and 7-Eleven stores, they have also been able to see
first-hand the benefits the technology can bring to merchants and
consumers alike.
“The fact that the major merchants
have already got on board with contactless gives credibility to the
technology for smaller merchants as they may not have been aware of
the technology before their competitors began to implement it,”
said Cartwright.
Another factor that is giving a
helping hand to the growth of contactless is that all four dominant
acquiring banks in Australia are supporting the technology and
doing so from a competitive perspective.
In addition to its contactless
plans, all new and reissued MasterCard credit and debit cards
issued by Australian banks must be EMV capable by October 2011 and
all POS terminals EMV compliant by April 2012.
Unsurprisingly MasterCard’s plans
are not being welcomed with open arms by EPAL – the company that
manages Australia’s domestic debit processor EFTPOS.
“When I look at the MasterCard’s
PayPass five-year strategy I am encouraged by the move to
contactless but what I am concerned about is the fact that the
existing MasterCard and Visa PayPass and paywave implementations
are still proprietary in nature,” said EPAL managing director Bruce
Mansfield.
“There is no common specification
of EMV code that allows us to offer contactless in an interoperable
basis. My concern with MasterCard issuing all its cards with
PayPass and getting a certain amount of terminals to accept the
contactless is that it is primarily an example of MasterCard using
contactless to take away choice to consumers and merchants.”
Mansfield claimed it is EMVCo, the
organisation established by American Express, JCB, MasterCard and
Visa to manage EMV Integrated Circuit Card Specifications, that has
the responsibility to create an interoperable platform for
contactless in Australia.
EMVCo has published a three-phased
plan for contactless implementation for Australia.
The first phase consists of
MasterCard and Visa providing their propriety EMV specification for
EMVCo to review, which took place last month. Mansfield claims the
country is at least a year away from having a fully interoperable
EMVCo specification that allows cards and terminals to work
seamlessly.
“By MasterCard publishing this
roadmap they are going to force merchants into not complying with
EMVCo because they are not going to want to have transactions
forced down a more expensive scheme debit path than domestic debit
with EFTPOS,” said Manfield.
He also goes on to claim that
MasterCard and Visa’s contactless offerings only fulfil one of the
three requirements for low-value e-payments in that it is fast but
not safe and not low-cost.
In a bid to make the EFTPOS
contactless payment option more attractive, EPAL is
considering introducing an aggregated purse as opposed to a
transaction based solution as he believes a merchant does not want
to pay a merchant service fee for every transaction under A$10
($10.7).
Despite the rumblings between
EFTPOS and the card networks, the level of innovation in
Australia’s payments market is very encouraging.
The realisation that the merchant community plays an important
and crucial role in the success of any payment form has been
clearly identified and other markets could be said to have a lot to
learn from ‘Down Under’.
