Technology has real impact on our business and will continue to do so. In the short term, it will lead to a dramatic change in the way we pay for things, and the ‘smartphone’ will lead the way. Russell Zimmerman looks at the implications.
In 2016, there has been a focus on the broad issue of retail payments. At this point in time, there are two key changes in payments with which retailers and landlords alike should be familiar – particularly those shopping centre owners and operators who provide gift-card offerings and the like.
The first, which the ARA has been working on for some time, are the results earlier this year of the Reserve Bank of Australia’s reforms on payments systems, which for large retailers and landlords took effect from September 1.
Caps have now been placed on the interchange fee for merchants on debit cards, prepaid cards and credit cards in a bid to reduce surcharging on card payments by retailers. The capping of premium card charges at 0.8%, and the more regular weighted average benchmark setting at 0.5%, is intended to drive lower costs for retailers.
This change is the result of the ARA’s ongoing efforts to reduce merchant fees and have credit cards such as American Express and Diner’s Club regulated. Both retailers and consumers are expected to benefit from lower costs following implementation.
Fines may be applied if merchants are found to be excessively surcharging in the face of the new rules, with small retailers also required to adhere to the new rules from the later date of September 1, 2017.
In other payment areas, the ARA has been active in supporting some of the banks with the view to opening up competition around mobile wallet providers.
There is an opportunity for rapid innovation and new players, platforms, and services to emerge in the mobile payments arena; however the ARA is of the view that, to provide an even playing field, consumers and merchants must be able to choose between mobile wallets and mobile payment services regardless of the mobile device or platform they have chosen (Apple or Android).
At present, Apple Pay remains the only app that can use the iPhone’s Apple iOS NFC (Near Field Communications) functionality, despite the existence of myriad other mobile wallets, including Google. This is an issue, as mobile wallet operations rely heavily on the NFC tools built into mobile devices.
With Apple’s iOS or Google’s Android installed on almost every smartphone sold today, a service only available on one of those platforms will struggle to succeed. We would like to see all customers have a choice of mobile wallets and payment services using the mobile phone they already have, along with the bank debit and credit cards they already use.
If authorisation is granted for Bendigo and Adelaide Bank, Commonwealth Bank, National Australia Bank and Westpac to jointly negotiate with mobile wallet providers, we believe that the opportunity to collectively negotiate with Apple could benefit not only the applicants, but all banks, merchants, app developers and ultimately customers in Australia and overseas.
Moving on from payments, the recent fall in retail sales growth has been well documented by mainstream media. The ARA is hoping August’s interest rate cut to 1.5% will halt the year-on-year slide of retail sales growth, which is also being compounded by deflation in some categories.
Deflation is being seen most keenly in food and groceries, where competitive pressures between Aldi and the majors have seen sizable price cuts on everyday grocery purchases. Clothing and footwear have also experienced some deflation; however this sector is faring a little better than the former, in that steady sales growth has returned in recent months.
Finally, last month, the ARA hosted the annual eftpos ARA Australian Retail Awards breakfast in Melbourne. 2016 saw not only the largest number of entries to the Awards to date, but also the highest calibre.
Aldi was crowned eftpos Retailer of the Year, with the ARA Independent Retailer of the Year Award going to Wilson Retail, owner of NSW chains Saltwater Wine and Stormriders for the third year running.
The wide and varied competition field this year is a testament to Australian retail’s strength and innovation, and we look forward to watching the industry prosper well into the future with the support of key industry stakeholders, such as shopping centres, landlords and suppliers.
