Woolworths, Australia’s largest retailer, is the first major company offering customers the option to link their current account to its app. The tie-up uses Australia’s new payments platform, PayTo. The real-time payments infrastructure is built by the banks and run by Australian Payments Plus.
There are two clear potential benefits for Woolworths here. Firstly, it hopes to reduce its payments costs. Specifically, the retailer gains the cashflow benefit of receiving consumer funds instantly as opposed to waiting for next-day settlement.
In addition, the move drives customers to its digital wallet offering and will raise engagement levels of its loyalty programme.
The Woolworth Everyday Rewards programme currently has over 14 million members. Woolworth first half revenue for the current fiscal rose by 4% y-o-y to A$33.2bn. Group EBIT increased by 18.4% to A$1.64bn.
Woolworths aims to enable the PayTo option for in-store payments later this year.
Major shift in Australia’s payment landscape
Luke Fossett, GM of GoCardless ANZ, said: “Woolworths’ recent announcement related to the adoption of PayTo represents a big shift in the Australian payment landscape. In addition to reinforcing Woolies’ commitment to providing shoppers with choice over how they pay, this will make a huge impact in raising awareness for PayTo.
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In fact, research from our State of Pay report reveals only 23% of Australians are currently aware of the technology.
“The transition to PayTo will only become a reality for most businesses as the plan to decommission traditional direct debit becomes clearer.
“Some businesses are already committed to being early adopters, some will take time. But companies that are not yet ready to switch across don’t need to worry just yet. For both recurring and one-off payments, the ever-reliable traditional Direct Debit can be used as a foundation ahead of the transition to PayTo to help businesses cater for consumer payment preferences and lay the groundwork for this future way to pay. When businesses are choosing to seek out more convenient and secure alternatives to traditional card schemes, they should consider payment strategies that offer diverse and flexible options for customers that are also secure and convenient.”