Recently, we were invited as a significant POS Software supplier to a meeting to discuss the new payment method, PayTo, which is slowly being released.

The argument was that it would help with merchants' payment processing fees and reduce the frustrations of delayed settlements, customer arguments and chargebacks. It may help with the payment fee but certainly will help with the significant pain points of delayed settlements, customer arguments and chargebacks.

Think of it as an improved debt card system that can replace much of your credit card fees.

It gives you direct access to your customers' bank accounts and a faster, more secure, cost-effective payment method.

Let me start by saying that several larger retailers are using it, and soon, customers will expect it in your shop. I doubt you can avoid its usage. The big plus for the customer is that there is little to no cost for them.

It's excellent for larger items and items that need payment terms. They are looking at mid-this year for PayTo to go critical.

What is PayTo?

PayTo is a digital payment system that allows you to receive payments directly from customers' bank accounts. It's a modernised version of direct debit designed to be faster, more secure, and more flexible. As it operates in real-time, you get speedier cash flow.

How Does PayTo Work?

To use PayTo, your business must be sponsored by a bank, financial institution, or payment service provider. It is unclear if this sponsorship will involve you with a setup fee from your bank, but the process is straightforward once you're set up. Here's how it works:

Create a PayTo Agreement

You must define payment terms, including the amount, frequency, and duration. This agreement can be used for one-off, recurring, or ad-hoc payments.

Customer Authorisation

Your customer provides their PayID. The PayTo agreement is sent to their bank for authorisation, and they must approve it through their banking app. It ensures transparency and Security.

Payment Execution

Once authorised, PayTo debits the customer's account according to the agreed terms and instantly transfers funds to your business account.

Key Benefits of PayTo for the Merchant

Real-Time Payments

This is a big plus, as with PayTo, you instantly get the funds into your account. This will eliminate many of the delays associated with traditional payment methods. It means you can access your money immediately, improving your cash flow.

Lower Transaction Fees

Unlike credit card payments, PayTo does not go through a credit card supplier, so there are none of their fees.

Reduced Risk of Chargebacks

Since the customer has authorised it, the risk of chargebacks is reduced. In practice, this has been shown to reduce disputes.

Enhanced Security

Your customer agreements are now authorised through your customers' banking apps. It would reduce the risk of fraud.

5. Streamlined Reconciliation

The banks have reports that provide detailed transaction data, making matching payments and managing your accounts easier. Once this gets going, we will look into automating this in your POS System.

How to Get Started with PayTo

Check it out online

Click here

Contact Your Bank

You should contact your bank to learn about their PayTo options; there are some issues to resolve, particularly the potential costs.

Setup Fees

To use PayTo, your business must be sponsored by a bank or financial institution. Depending on your commercial arrangement, this may involve setup or access fees.

Transaction Fees

While PayTo generally has lower transaction fees than credit cards, I am unsure about debt cards.

The cost I was quoted was $0.30 fixed. Now, if I am doing a $500 transaction, that is quite reasonable, but if I am doing a $5.00 transaction, $0.30 is not so good.

Conclusion

PayTo is a modern payment solution that addresses many of the challenges retailers face with traditional payment methods. As I stated, it's coming; we can do nothing about that. Customers will want it.

Key Takeaways

• PayTo enables real-time payments directly from customers' bank accounts.
• We are on to it.
• It offers lower transaction fees and reduced chargeback risks compared to traditional methods.
• Retailers can benefit from improved cash flow, enhanced security, and streamlined reconciliation.
• To get started, contact your bank or financial institution and explore PayTo's resources.

Here are two reasons why the present card payment system is wrong.

The current card payment system in Australia is fundamentally flawed. It unfairly burdens merchants, particularly on small businesses. While convenient for consumers, this system has created a cost crisis that threatens the viability of many Australian retailers.

The Card Payment Boom

The increase in card payments has been remarkable, but it has also placed significant financial burdens on merchants as I will show.

The Cost of Convenience

Merchants bear a significant portion of the costs associated with card transactions:

• 50% of fees on debit card transactions
• 80% of fees on credit card transactions

These costs are mainly in the interchange fees, which make up about 80% of merchants' total fees for card transactions.

Understanding Interchange Fees

Interchange fees serve several purposes:

1. Transaction processing: Covering the costs of handling electronic payments
2. Risk management: Mitigating fraud and credit risks
3. Network maintenance: Supporting the infrastructure that enables card payments

Although the fees have dropped over time, as card usage has increased, total card costs have skyrocketed.

My first thought is why the fees here are so much higher than in many European countries. Indeed, Australia, with its lower cost structure, should be cheaper.

 I don't accept the bank's argument that our costs must be higher because of our low population. Australia's population is higher than most European countries.

In 2021, the average merchant service fee in Australia was 0.9%. In the EU, the average fee is 0.3% for credit cards and 0.2% for debit cards.

The Effect on Retailers and Consumers

The current fee structure creates a complex dynamic, as retailers pay most fees.

Now, card issuers offer more attractive terms to cardholders to attract more business, such as rewards points, which the card issuer charges the retailer. Is it correct that retailers should be charged these reward costs? I do not think so. Plus, under the current system imposed by the ACCC, retailers cannot surcharge many of these reward systems. For example, a premium VISA card must be charged the same surcharge as a standard VISA card.

Cost of card payments

Although the costs are dropping, as card usage has exploded, the total cost has skyrocketed. The immediate problem with these fees, which are dropping, is that they are still high in Australia compared to other countries like Europe. If in Europe, with its higher cost structures, it can be cheaper, why not here?

Over the same period, we have seen that card suppliers have moved the cost they levy from the customer to the merchants. Today, merchants pay almost all these costs.

The Reserve Bank of Australia has written a good article on the cost of Card Payments. You can read it here.

It is unfair that Small Businesses Pay More

A study by the RBA found that, on average, small merchants pay transaction fees that are about three times higher than those paid by large merchants. This significant gap raises questions about fairness and produces major competitiveness problems.

Factors Behind Higher Fees for Small Businesses

Several factors contribute to the higher costs faced by smaller merchants:

1. Limited Bargaining Power: Large businesses can better negotiate favourable wholesale fees for processing card transactions.

2. Fixed Costs: Accepting card payments involves fixed costs like purchasing or renting payment terminals. For smaller merchants, these costs are spread over a lower volume of transactions, leading to higher average costs.

3. Pricing Plans: I often see smaller merchants opting for short-term plans, which are generally more expensive in the long run.

4. Lack of Volume Discounts: Larger merchants benefit from volume discounts due to their higher transaction volumes, a benefit that's out of reach for most small businesses.

The Numbers Tell the Story

The disparity in costs is significant:

• The smaller merchants on the chart have an average cost of acceptance across all card types of 1.15% of transaction values.
• In contrast, the largest has an average cost of acceptance of just 0.47%.

The Broader Impact

This cost disparity has several implications:

1. Reduced Competitiveness: Higher transaction costs make it harder for smaller retailers to compete with larger retailers.

2. Cash Preference: Some small merchants discourage card use or implement minimum purchase amounts for card transactions, inconveniencing customers.

Here is a good article on the problems of small vs large retailers here.

Looking Ahead: Technology potential solutions.

Digital Wallet Integration:

Improvements to digital wallets like Apple Pay, Samsung Pay and Google Pay in the Australian card payment ecosystem could bypass some traditional card network fees, providing a direct, less costly payment route. These could bypass the card entirely.

Bitcoin as a Potential Solution

Items like Bitcoin present an intriguing alternative to Australia's current card payment systems, particularly for small businesses facing high transaction fees. Bitcoin has much lower transaction costs as it has no interchange or bank fees, plus it offers a level of anonymity and security that cash provides.

What the government should do?

-We should introduce a low-cost card payment system with the same fee, regardless of the business's size. We have one now, called cash, but we need something to replace it. Merchant surcharging should not be allowed in that payment system.

-Transparency in fee structures. We cannot act until we know exactly what is happening.

-A review of the current costs of interchange fees. Why do the card providers need so much in fees?

-A review of the card costs: Why should merchants have to pay for the reward system for many cards? If card suppliers want to market their cards more, they should pay for it. The current surcharge rules by the ACCC are wrong, as they do not allow a merchant to charge a surcharge on many premium cards. 

Conclusion

The Australian payment system needs urgent reform to protect small businesses and ensure fair competition. The convenience of card payments shouldn't come at the expense of our vibrant small business sector.

Today, not offering various payment alternatives will cost you. People want it. Yesterday, I went to buy bread partly to remove some change in my wallet; I went not to my regular bakery but to a bakery that I know accepts cash.

The Power of Flexible Payments

Catering to Customer Preferences

Our POS software features fully customisable payment methods.

Choose from cash, card, mobile payments, or bank deposits—whatever suits your customers' preferences.

This flexibility enhances customer satisfaction and keeps you competitive in Australia's evolving retail landscape.

Streamlining Transactions

An integrated POS system allows you to process payments faster and more accurately than traditional methods. This efficiency translates to shorter queues and happier customers.

Advanced Payment Handling

Split Payments and Deposits

Our POS solution goes beyond basic transactions. It allows for sophisticated payment scenarios that cater to various business models.

For instance, a customer ordering custom furniture can make a 50% advance payment, with the balance due upon delivery. This feature is handy for businesses dealing with high-value items or custom orders.

Customising Your Payment Rules

Tailor your POS system to match your unique business needs. Set minimum purchase amounts for card payments or configure automatic surcharges for specific payment methods.

Navigating Payment Method Restrictions

While customising your payment options, it's crucial to understand the legal framework governing payment methods in Australia. Unless you have a sign that you do not accept cash, you need a good excuse to reject it, e.g. you do not have enough change.

The Future of Retail Payments

Contactless and Mobile Payments

COVID skyrocketed contactless payments. Most card payments now are contactless. Now, the convenience of tapping a card or device to pay speeds up the checkout process and enhances customer satisfaction by minimizing physical contact.

Security Benefits

What I like about contactless payments is their enhanced security features. Contactless technology provides a safer transaction environment by reducing the risk of card skimming and card security as you do not handle the card.

Mobile Wallet Usage

Mobile wallet usage is rapidly rising. These digital wallets give ease of use and enhanced security through biometric authentication, such as fingerprint or facial recognition. For example, I like that my fingerprint protects my card usage.

Choosing the Right POS System

When selecting a POS system for your retail business, consider these key factors:

• Integration capabilities with your existing systems
• Scalability to grow with your business
• User-friendly interface for quick staff training
• Robust reporting features for business insights
• Regular updates and excellent customer support

The Impact on Your Bottom Line

Implementing comprehensive payments will have a significant impact on your business:

• Reduce transaction times
• Increase average transaction value; studies show people spend more on electronic money.
• Boost customer satisfaction scores with faster, more flexible payments in the form they like.

Ready to revolutionise your payment process? 

Frequently Asked Questions (FAQ)

Q: How do contactless payments work?

A: Contactless payments use Near Field Communication (NFC) technology. This method is fast, secure, and reduces physical contact, making it a preferred option for many consumers.

Q: What are the benefits of using mobile wallets?

A: Mobile wallets offer several benefits, including convenience, speed, and enhanced security with biometric authentication. 

Q: Are contactless payments secure?

A: Contactless payments are generally secure, I think more so than physical cards.

Q: What should I consider when choosing a POS system for my retail business?

A: When selecting a POS system, consider integration capabilities with existing systems, scalability to accommodate business growth, user-friendly interfaces for easy staff training, robust reporting features for business insights, and reliable customer support.

Q: How do POS systems handle split payments or deposits?

A: Our advanced POS systems allow businesses to manage complex payment scenarios such as split payments or deposits. This feature is handy for restaurants where customers often prefer split bills.

Q: Is tap-to-pay safe from skimmers?

A: Tap-to-pay transactions are generally safe from skimmers because they use encrypted data transmission and do not rely on the magnetic stripe that skimmers typically exploit. Mobile payment goes one stage further by adding an extra layer of security. 

The government has announced plans to ban debit card transaction fees, potentially starting January 1, 2026. This proposed ban, however, doesn't extend to credit card transactions.

A Global Trend in Payment Practices

In truth, this banning of debit surcharges was expected. Many countries, including the European Union and China, have implemented similar bans. Australia is now catching up with this global trend in consumer protection and payment fairness.

The Current Landscape: Widespread Surcharges

Today, many organisations, including government authorities, charge these fees. For instance, the Australian Taxation Office (ATO) imposes surcharges on card payments. This practice is widespread across various sectors and affects consumers daily.

Consumer Frustration: The Hidden Costs of Convenience

Many consumers, myself included, are frustrated with the current situation. It's common to hear complaints. I know I am not the only one who doesn't like that a $7.50 coffee and doughnut is charged at $8.00. If I am told it's $7.50, I get a receipt for $7.50, and in the bank, I see $8.00.

This sentiment is extreme here when the surcharge seems disproportionate to the transaction amount. From my extensive research into bank systems, I can confidently say that the cost of processing a $7.50 debit transaction is nowhere near 50 cents. Taking money from one account and putting it into another cost the bank no more than a few cents.

Potential Impacts on the Retail Scene

The ban on debit card surcharges will likely have far-reaching effects on retail. Here are some potential economic points to consider:

Increased Consumer Spending

By removing a barrier to debit card use, we might see a slight increase in overall consumer spending. The absence of surcharges could encourage more frequent use of debit cards, potentially leading to more transactions.

Acceleration of Cashless Trend

Australia is rapidly becoming a cashless society, and this ban will accelerate this trend. What is keeping cash going is the lower fees to the consumer. If debit cards become even more cost-effective for consumers, they will use them more.

Potential Price Increases

Some businesses might have to increase their prices depending on how this is implemented. We already have too much inflation that refuses to go away, potentially exacerbating the issue.

Changes in the Banking Sector

Today, these fees play a significant role in banking pricing. If banks are not making money from these fees, what adjustments will they make to their business charges? This is a crucial question that needs addressing.

Retailers' Concerns: Questions That Need Answers

Here are some questions that I think retailers need to ask now while people are talking about these changes, If they miss this opportunity, what you will find is that the banks will talk, consumer groups, government and since retailers are not talking what will come out of it?

1. Costs: Who will pay for these costs if fees are eliminated? Retailers should be concerned about who will absorb these costs if surcharges are banned.

2. Fee discrepancies: There's a noticeable difference in processing fees charged to small businesses compared to large corporations. Why are small businesses often charged up to twice as much? The costs surely are not that much more!

3. Premium Card Fees: Retailers are often charged higher processing fees so the bank customers can get benefits like Qantas points. Is this justifiable?

4. Card-Specific Surcharges: Retailers cannot charge different surcharges for different types of cards. The ACCC is wrong to make it mandatory to charge the same fee for a standard Visa card and a premium Visa card.

5. Bank Fees: Why are our debit and credit card fees so much higher than those of many European countries and China? This deserves a thorough investigation.

6. Unfair fees: Unlike large retailers who can negotiate better rates with banks, small businesses often pay double the fees for card processing. Besides being unfair, it means that the effect of these costs will have more impact on them.

Moving Forward: The Need for Dialogue

As we approach the potential implementation date, consumers and businesses must stay informed about these changes. Retailer representatives should engage with the government to address their concerns.

Moreover, this presents an opportunity to review and potentially overhaul Australia's card payment system.

The Future of Payments in Australia

Today, about 12% of transactions are made using cash, down from 27% five years ago. We're rapidly moving towards a cashless society.

Conclusion: A Complex Issue Requiring Careful Consideration

In conclusion, while the proposed ban on debit card surcharges is generally positive for consumers, other stakeholders have legitimate concerns. The government must carefully balance consumer protection with the financial realities retailers face.

Frequently Asked Questions (FAQ)

Q: Are there any exceptions to the debit card surcharge ban for specific industries or transaction types?

A: As of now, I have heard no talk of any exceptions being announced. The government will likely provide more details as the policy is developed.

Q: What measures will be taken to ensure businesses don't increase prices to offset the loss of surcharge revenue?

A: I am guessing here, but I suspect the Australian Competition and Consumer Commission (ACCC) may monitor for unfair price increases.

Q: How will the ban impact digital wallet payments and mobile payment platforms?

A: I am wondering about this. Apple, for example, has a special fee. This is an overseas fee, so it's unclear whether it's covered here. So, we do not know whether this ban applies to all debit card transactions made through digital wallets and mobile platforms.

Q: How will this affect loyalty programs or cashback offers tied to card usage?

A: The ban may affect these programs. I am worried that if the banks face reduced revenue from merchant fees, they might move to a retailer-pay model.

Q: What support or resources will be available to help small businesses adapt to these changes?

A: The government hasn't announced specific support measures yet; retailer associations should investigate.

Q: How might this affect international transactions or tourists using foreign-issued cards in Australia?

A: Who knows? In this situation, the merchant may be charged the fee.

Q: How will this impact the competitiveness of different payment methods in the Australian market?

A: It makes debit cards more competitive compared to credit cards and probably cash.

Many details will need to be developed and implemented.

World Wide Web Day is when the World Wide Web started 35 years ago.

In just 35 years, the internet has revolutionised retail, driving business digital transformation at an unprecedented pace. It has reshaped how businesses operate in an increasingly digital world.

The Evolution of POS Software

Its been remarkable. The days of cumbersome cash registers and tedious manual entry are behind us. The internet's influential role has reshaped the operations and customer experience for local businesses.

• Local shops now need an online presence for small retailers
• Access to e-commerce platforms
• Social media to improve customer engagement
• The fax and much of the mail have practically gone
• Digital receipts

Digital Payment Solutions

Today, most payments, such as EFTPOS and credit cards, are made online. We at POS Solutions were the first software company to introduce this to Australia. https://www.possolutions.com.au/pages/tyro-payments.

Retail in the Internet Era

E-commerce has created new revenue streams and broadened customer access for small businesses. The COVID-19 crisis accelerated this trend.

Today embracing the power of data, including CRM and analytics, has emerged as a game-changing strategy for local retailers.

Customer relationship management (CRM) tools have become indispensable for small retailers. These systems allow businesses to:

• Track customer preferences and purchase history
• Personalise marketing efforts
• Improve customer service

The main reason this works today is that, with email and internet newsletters, businesses can communicate effectively for free with their customers. Before the internet, this was very expensive and only available to large companies.

Local Business Marketing Online: A Game-Changer

Local business marketing online has revolutionised how local retailers attract and retain customers. Strategies like local SEO, social media marketing, and targeted online advertising need to be looked at  to compete effectively.

Conclusion: Embracing the Digital Future

The internet has undoubtedly transformed retail.

There is no going back. 

Have you ever wondered what would happen if your system suddenly stopped? During the recent CrowdStrike outage, millions of retailers experienced this. They entered their shop, only to find their computers frozen and no-one of taking in eftpos. It's enough to make any business owner break out in a cold sweat as he looks at all the staff just sitting around.

The CrowdStrike Outage: A Global Crisis

Last week, the retail world was rocked by what experts call the most significant computer outage. It had a global impact, affecting businesses everywhere.

The Scope of the Problem

• Duration: For many, this outage lasted a few days. The day after, I took a picture of a supermarket checkout at my local supermarket.

• Geographical Reach: Businesses from Australia to Europe and North America reported issues.

This unprecedented event highlighted the critical need for robust POS system backups and comprehensive business continuity planning.

The Impact on Retailers

A Digital Domino Effect

The CrowdStrike outage wasn't just a minor inconvenience. For many retailers, it was like someone had pulled the plug on their entire operation. Here's what we saw:

• Computer Chaos: Many retailers' computers stopped working, and suddenly, people were manual.
• Manual Mode Activated: Shops had to dust off their old-school methods and operate manually, highlighting the importance of maintaining manual operational skills.
• Payment Pandemonium: Electronic payment disruption was widespread. For many stores, it was cash or nothing, underscoring the ongoing importance of cash transactions in our increasingly digital world.

  

Brick-and-Mortar Business Resilience Tested

This crisis put the spotlight on brick-and-mortar business resilience. Stores that had prepared for such scenarios fared better, while others struggled to maintain even basic operations. It became clear that in the face of retail technology failure, having a solid backup plan is not just advisable - it's essential.

Our Experience

Interestingly, none of our clients seemed affected by this widespread issue. We were ready, armed with fixes and procedures, but no one called. It was a bit like preparing for a party, getting dressed up and not going—frustrating, to say the least!

We even initiated a ring at a few sites we thought might be in trouble, but they were all fine.

Lessons Learned

The Golden Rule of Updates

I was gobsmacked to learn that many affected sites had broken the cardinal rule of IT: Never do an update on a Friday. It's like tempting fate just before the weekend! This incident is a stark reminder of the importance of timing in system maintenance and updates.

Insurance Implications

Those impacted should definitely touch base with their insurance providers. Your policy might just cover such tech-related interruptions.

Cash is Still King (Sometimes)

Meanwhile, this shows that we cannot yet get rid of cash. We are not yet equipped for a cashless society. Never undervalue the role of cash today!

Preparing for Future Outages

Create a Backup Plan

1. Develop offline procedures for critical operations
2. Train staff on manual processes
3. Keep physical copies of important information
4. Regularly test and update your retail tech disaster recovery plan

Build Resilience

• Diversify payment options: Don't put all your eggs in one digital basket
• Maintain offline capabilities: Keep those old-school skills sharp
• Stay informed: Keep an eye on tech news and potential threats
• Invest in reliable POS systems: Choose solutions with robust backup features and offline capabilities

Conclusion

This massive outage exposed our vulnerability to tech failures. As retailers need to stay alert and flexible. Learning and developing comprehensive backup strategies will help your stores weather future tech storms.
Smart retail isn't just about the shiniest new systems – it's about being prepared for system failures. Heed the warnings from this worldwide tech meltdown and shield your business from upcoming digital challenges.

"I'm sorry, but we no longer offer cheque facilities on this account." Imagine the surprise when the Commonwealth Bank of Australia told a long-time client of mine this. I was stunned, yet it's a fact throughout Australia today. Cheque usage in Australia has fallen so much. In the 1980s, cheques were 85% of all non-cash transactions. Today, they make up 0.01% of total payments. 

In 2023, Australians wrote less than one cheque per person a year. 

The Generational Divide

It's not just the numbers changing; it's the people too. Here's a quick breakdown that might surprise you:

It's not good for the cheque's future.

Cheques in Australia 2030: To Accept or Not to Accept?

Many retail Australian businesses no longer accept personal checks.

As a business owner, you might be torn. On the one hand, it's hard to refuse a payment if the customer is willing to pay, but it comes with risks. Let's break it down:

Pros of Accepting Cheques:

• Cater to older customers
• Rural areas with bad internet
• Avoid some processing fees, which is a huge problem as many of my clients sell low-margin items like lotto products.

Cons of Accepting Cheques:

• Risk of bounced cheques
• Time-consuming to process
• Time to get the payment into your account
• Potential for fraud (counterfeit, lost or altered cheques)

I had a customer whose chequebook was stolen, and it took a while to sort it out. If you have an old, unused chequebook, I suggest you destroy it.

Conclusion

The cheque's last stand is upon us, they are scheduled to be phased out in 2030. This doesn't spell doom for retailers as currently its use is limited.

The fact is that your next customer will be with a smartphone in hand, so make sure you can accept this payment method.

I recently had a surprising experience at a large supermarket. I went to pay and was told to go to another cash register as this one could not handle cash! While I'd seen this once at a trade show, it was the first time it had been in a mainstream store. This got me thinking that we are genuinely nearing the end of cash, despite what banks and governments say. Soon I expect many shops will introduce a surcharge for cash.

The Australian Cash Exodus

The numbers don't lie. The Global Payments Report predicts a dramatic shift – by 2025, cash will likely account for just 2% of the value in all point-of-sale transactions. It's not going away entirely, but other methods will dwarf the amount we spend using physical cash.  Unsurprisingly, it notes that ATM withdrawals also decline as people ditch cash.

Convenience and Security

We are also seeing the successors to credit and debit cards coming with digital wallets on our smartphones. These are far more secure. Think about it: a thief can potentially use a stolen card, but with a smartphone app, they'd need your phone, access to it, and usually your fingerprint. It's a big leap in protection!

Brick-and-Mortar Retailers: Time to Adapt

This cashier-less trend isn't just curious; it's a real opportunity for small businesses. Here's why upgrading your point-of-sale system makes sense:

- Efficiency:  No more fumbling with notes and coins means faster checkout. Customers love speed!

- Improved Security:    Less cash on-site drastically reduces the risk of theft.

- Enhanced Customer Experience:   People demand payment choices; cashless often feels to them secure and streamlined.

Embracing the Cashless Evolution

The retail world changes quickly. To stay ahead of the game, adaptability is key. Cashless point-of-sale solutions aren't just a trend but likely the future standard.

A Personal Note

Change can be unsettling – I remember when cards themselves were the new, scary thing! The same will happen with the shift away from cash. I know we now have and are selling cashless registers.

Ready to Make the Shift?

Our POS software is designed with both cashless and traditional payments in mind. Get your free consultation today, and let's future-proof your business together!

It appears the way people will pay is changing, and Australian retailers need to know. While not yet available in Australia, palm-based payment technology is gaining traction in the US. I see it appearing here soon.

What is Palm-Based Payment?

This technology links customers' unique vein patterns in palm prints to credit/debit cards. At checkout, a person whose palm is registered hovers their hand over a scanner. The scanner reads their vein structure and sends the details to the bank for payment authorisation. Such systems are already in use at select locations in the US. 

The Advantages for Retailers

• Seamless Transactions: Say goodbye to customers fumbling for cards or struggling to remember PINs.
• Time: Palm scanning offers faster transactions, saving shoppers and staff valuable time.
• Heightened Security: Biometric data is incredibly difficult to replicate, adding a robust layer of security and fraud protection. We now have a big problem with customers making transactions, paying by card, and then claiming it was not them. I had one client whose credit card was stolen, and by the time she found out, which was less than an hour, her card had been used in thousands of dollars of transactions.

The Disadvantages for Retailers

I confess I do not see any.

Still some issues to chew on would be:

• Cost: The readers may be expensive, and who pays for these palm scanners may be an issue.
• Integration: I do not see any potential integration issues with our point-of-sale systems, but if you do not use our POS System, you may want to make some enquiries.
• Privacy: I think we all feel a general uneasiness about our privacy. Mark Zuckerberg from Facebook once said the age of privacy is over, and he is probably right. Still, it's tough to accept this fact.
• Training: We all need to be trained on how to use it until we all get used to it. I can see someone using the wrong hand and not knowing why it is not working.

What Aussie Retailers Should Do

• Get Informed: Stay up-to-date on the latest developments in biometric payments.
• Monitor Customer Sentiment: Gauge your customers' comfort level with biometric technologies. Their openness will factor into adoption.
• Prepare for the Future: While immediate implementation is not necessary, consider how your payment infrastructure could adapt to support biometric options in the future.

The Takeaway

Palm-based payments and biometrics as a whole are set to transform the way we pay. While the timeline of widespread adoption in Australia is uncertain, being informed and prepared positions your retail business for success in this evolving landscape.

Last week, the "Cash Out Day" protest highlighted a growing tension in Australia's payment landscape: the rapid decline in cash usage and its implications for businesses and consumers. On April 2nd, Australians were asked to go to an ATM and withdraw some money in a symbolic gesture of support for cash. According to social media images, many did. I was one of them. While the exact total amount withdrawn is unclear, from social media, it appears that many did participate. However, the Australian Banking Association (ABA) stated there was no "material difference" in cash withdrawals across the industry on the day. What does that mean exactly? I would like to see figures.

What Sparked "Cash Out Day"?

This movement stems from several factors:

Shifting Payment Habits: Cash now accounts for about 13% of customer payments in Australia, which is a dramatic fall from 60% in 2010.

Bank Policies: Branch closures have created obstacles for cash-reliant individuals and businesses.

Cost of cash: Many people today prefer cash; in many cases, it's cheaper and more manageable, and there are fewer security issues, too.

Banks: Banks make money on non-cash transactions. By closing branches, they are effectively discouraging cash deposits/withdrawals.

Cashless Aspirations: I think the government would prefer to eliminate cash. The Queensland government stated that it envisions a cashless state by 2030. 

Arguments in Favor of Cash

"Cash Out Day" advocates cite these benefits:

Inclusivity: Cash requires no bank accounts or technology, making it accessible to all.

Budgeting: Physical money offers a tangible sense of spending.

Privacy: Cash transactions leave less of a digital footprint.

Reliability: Cash functions independently of power grids or internet connectivity. It still happens that EFTPOS goes out, so what do shops do when they switch to cash?

The Small Business Perspective

In Australia, it is legal for businesses to refuse to accept cash, provided that they inform consumers of their stance before entering into any “contract” for the supply of goods or services. If you want to reject cash, you must have a sign in a clear position in your shop saying that. Usually, it is placed at the front entrance.

Smaller retailers, especially those involved in markets or events, rely heavily on cash. My observations within my local newsagency network showed that while most owners knew about "Cash Out Day," its impact on their daily trade was minimal.

The Uncertain Future of Cash

The potential bankruptcy of Armaguard, Australia's major cash transportation company, further underscores the precarious position of physical currency. This raises concerns about the logistical and economic challenges of maintaining a cash infrastructure as usage decreases. 

The Role of POS Systems

A robust POS (Point of Sale) system becomes crucial for businesses in this evolving landscape. The right software seamlessly manages cash and digital payments, providing flexibility and detailed reporting while ensuring smooth, secure operations. A great POS system helps you manage it all!

The Bottom Line

"Cash Out Day" serves as a potent reminder that amidst the move towards a cashless society, the value proposition of cash persists. This debate centres on choice, accessibility, and the practical needs of businesses and consumers in an increasingly digital Australia.

Are you tired of transaction fees nibbling away at your bottom line? No-cost EFTPOS promises a solution, but is it the right one? Before signing on the dotted line, let's explore what this model really means for your business.

Now, many of our customers are switching to No-Cost EFTPOS, partly because we have negotiated some really good deals for our clients and partly because many are tired of watching transaction fees eat away at their hard-earned profits. But often washing your hands of the problem is not the best move.

No-cost EFTPOS might seem like the answer to your prayers. But before you sign up, let's look at this payment model so you can make the best decision for your bottom line.

What is No-Cost EFTPOS, Really?

Think of it as a cost shuffle. In theory, it's marketed as that instead of you shouldering the fees that come with accepting card payments; your customers pay the small surcharge on each transaction. I would say the customer quickly knows the fees and does not care who charges them; they put the amount on you, and despite the hype, the customers do not care as it's so small; they do care.

The Upside: Real Benefits

• Say Goodbye to Hefty Fees:  No more upfront payments for your EFTPOS machine or those pesky monthly charges. This can be a massive relief for cash-strapped businesses.
• Flexible and Easy: Setup and calculations are a breeze.
• Pass on the burden and responsibility: The responsibility and some of the legal dangers for these fees are passed onto the EFTPOS provider!

Hold On, Not So Fast! Considerations to Keep in Mind

• Customer Experience: Be prepared to explain the surcharge clearly, especially on smaller purchases. Nobody likes surprises at the checkout.
• Limited Control: You might lose the ability to use fancy features like dynamic surcharging, where the fee changes based on card type. The odds are your EFTPOS fees will be higher.
• The Fine Print: Many fees you can claim are not included, e.g., setup charges and chargebacks.
• Lack of control: Currently, you control the fees; under No-Cost, you do not.

Is No-Cost EFTPOS Right for YOU?

Ask yourself these key questions:

• Transaction Volume: Do you take TONS of card payments each month? Lower volumes make No-Cost EFTPOS more attractive. 
• Price Control Cravings: Do you want to fine-tune how you charge customers? Traditional plans give you more options. A very successful marketing strategy is to offer all sales over $50 with no fees. Customers will often increase their basket size to get over this amount.
• Tech Tolerance: Are you ready to handle extra customer questions about the surcharge?

The Final Word: It's All About the Fit

No-cost EFTPOS is great for some businesses, but it's not a one-size-fits-all solution. Do your homework, talk to us, and compare your total costs with both models. That's the savvy way to find the system that lets you focus on what you do best—running your awesome small business!

The holiday season is nearly here, and for retail shops, that means busier than usual trading days. As you gear up for the summer sales rush, it's essential to be aware of potential delays in settlement dates over the public holidays. 

What are Settlement Dates?

Whenever a customer pays with a credit or debit card, the funds from those transactions don't land in your bank account immediately. Usually, we see a 1-3 day delay, the settlement period, which is the period it takes for the banks to finalise the transactions before releasing your funds.

The time it takes to hit your bank depends on how many steps the funds take to flow. Today, with the least call routing in place, it is likely that two almost identical payments going through at the same time will hit your bank at different times.

What is happening due to public holidays is that your funds are delayed because one step is delayed. This happened recently to people who accepted an American Credit card, and in this settlement period, the thanksgiving day appeared, and their funds were delayed on the USA side.

Why You Should Pay Attention to Settlement Around the Holidays

Due to various public holidays occurring in late December and early January, including Christmas Day, Boxing Day, and New Year's Day, settlement of your daily takings can be delayed by up to 5 days. This is extreme, but it does happen.

For businesses already operating on tight margins, these longer-than-normal settlement times can cause havoc with managing cash flow. Plus, as these delays are often unknown, it makes it hard to accurately forecast cash flow, which is essential for keeping a business afloat.

Tips to Manage Settlement Delays This Holiday Season

Here are some handy hints for retail shops to minimize business disruptions from settlement delays over the holidays:

• Plan - Contact your provider to get a feel of what will happen. Do not count too much on them, knowing they are only one step in the chain. 

• Budget carefully - to cover unexpected delays in accessing your daily takings. Do not count on monies on the way.

By understanding settlement dates and planning appropriately this holiday season, small retail businesses can avoid being caught short and keep their sales momentum strong.

Streamline Success This Holiday Season

Managing the intricacies of settlement dates, cash flow delays, and inventory needs during the hectic holiday rush is hard enough for small retailers. Don't let outdated point-of-sale limitations make it more challenging.

The right POS solution, tailored for small retail businesses, can seamlessly handle all your transactions, payments, supply orders, and accounting in one integrated system. This means more efficiency, less wasted time, and complete control - even when settlement schedules are disrupted.

At POS Solutions, we understand the modern retailer because we’ve been in your shoes. That’s why thousands of businesses trust our POS platform and EFTPOS and Credit integrations. Our retail experts will help you.

Swipe, beep, tap. Thanks to modern payment technology, paying for something has never been easier. But while tap-and-go is crazy convenient for customers, the hidden fees in the payment system are anything but convenient for business owners.

Every time a customer pays with a dual-network debit or credit card, you may pay inflated processing fees that dig into your bottom line.

The Banks Have Been Slow to Act

But a simple fix could help you save - the least cost routing (Merchant-choice routing).

The Reserve Bank has revealed a woeful roll-out of least-cost routing technology by the major banks after repeated urgings to act.

.. the National Australia Bank has remarkably only turned the system on for 15 per cent of its merchants and the other major banks offer it to well under half their customers.

When I was told that, I freaked out.  How could so many people not have it? 

Small business payment processing

In the current payments system, a customer taps their debit or credit card to purchase in your shop, and that payment is without least cost routing, likely being sent through the bank's preferred path on the EFTPOS network, which is not often the cheapest.

But here's the thing - most of those cards also have access to the lower-cost EFTPOS network, but your EFTPOS/Credit systems are not set up to take advantage of this fact. If so, your shop is shouldering unfairly high fees on every card transaction. Why should you be penalised with an excessive fee?

Why Unfair Fees Matter

• You either absorb the fees and take a hit on your tight margins or pass the costs to customers through higher prices.

• This makes you dearer as your fees are higher than those with low-cost routing.

• This stifles competition when businesses are saddled with higher fees

Least Cost Routing Can Instantly Save You Money

Yet least-cost routing could help small businesses across Australia save over $1 billion per year.

With the least cost routing, dual-network card payments are automatically routed through the lowest fee network. This ensures you pay the minimum fees whenever a customer taps their card or buys online from your EFTPOS/Credit provider. Saving just cents per transaction adds up pretty fast.

Reducing card fees for small businesses

Please don't wait for your bank or payment provider to act because they are clearly not acting. You have to take control and access the savings of least-cost routing now.

Step 1: Ask Your Provider

First, contact your payment terminal or POS software provider. Ask if they offer the least-cost routing and whether it is activated for your business. If not, put pressure on them to enable it. 

Step 2: Review Your Fees

Take a detailed look at your monthly statements. Identify high credit/debit card fees.

Step 3: Train Your Team

Ensure staff know how to process cards via the EFTPOS network, which can save you money.

Take Action Now for Your Business

Small changes in your business can quickly add up to big savings. But we need your help to pressure the banks and payments giants to enable fair fees for all.

Contact your EFTPOS provider today to enable the least-cost routing. Also, check your monthly statements for excessive card fees to identify possible savings.

With simple advocacy, you can tap into instant savings for your shop. Let's work together to build a fairer payment system for small retailers and consumers.

If you have not done it yet, do it NOW!

When the EFTPOS Goes Down: The Importance of Disaster Recovery Systems for Small Businesses

In your retail store, it's easy to take modern technology for granted. Tap-and-go payments, internet banking, EFTPOS; these staples of Australian commerce feel like they'll always be there, operating smoothly in the background. Please do not believe that they always work. But critical systems like EFTPOS fail unexpectedly, and the impact today can be huge for retailers.

Outages Happen More Often Than You'd Think

Events like the Woolworths trading debacle click here for details highlighting that even large retailers with sophisticated IT infrastructure and internet are still at risk today. No system is immune to technical failures. If I made a bet with you that one of my clients would have an EFTPOS problem this week, I am sure I would win.

A survey by the Australian Retailers Association in 2019 found that many retailers had experienced an internet or EFTPOS outage in that year. As Murphy Law would have it, most that reported problems said it occurred at the worst possible time.

A Hot Day Spells Trouble

A newsagent who makes a good trade with drinks and ice cream, on a hot day, EFTPOS stopped working. It took several hours to fix it. They felt that they lost half their trade over those few hours as they were unable to process any electronic payments whatsoever. 

Why Small Businesses Are Especially Vulnerable

Larger retailers often have better systems and can justify high costs to minimise outage disruptions. But for small businesses operating on tight budgets, often with the cheapest internet plans and no redundancy, it makes them much more vulnerable to unplanned network and hardware failures.

What can be done.

• Make sure your EFTPOS systems have local mode. 

• Make sure your EFTPOS can go both through the internet and mobile data.

• Keep an option to accept cash in your shop.

Conclusion

Hardware failures and internet outages are inevitable risks for small retailers relying on electronic payments. Events like the recent Woolworths outage show that you can be affected even if you have the best equipment and systems.

Unfortunately, the article is protected by a paywall, but you can read the story here and here. In the US, Visa and Mastercard will almost certainly increase their network fees paid by merchants. While the exact details are still uncertain, it's reasonable to expect similar hikes to hit Australian retailers soon. Let's break down what this could mean for retailers.

The Potential Impact

• My back-of-the-envelope calculations suggest this would amount to a 0.5% increase in credit card fees.

• As economic conditions worsen, consumers rely more heavily on credit cards than debit cards or cash.

• With Australian interchange fees already low, these increases will likely roll out here too.

• Some merchants may see immediate impacts if they lack long-term contracts, locking in rates.

Coming at a Challenging Time

These fee hikes couldn't come at a worse time for small retailers already dealing with:

• High inflation driving up supply and operating expenses
• Households are now tightening their budgets
• Rising interest rates increase

This represents yet another margin squeeze small businesses did not need.

Strategies to Mitigate the Impact

While the situation seems bleak, retailers do have some options to minimise the damage:

• Review Pricing - I know it is challenging due to market and competitive factors, but you need to review your prices

• Renegotiate Rates - Use long-term contracts to lock in competitive credit card fees before the hikes hit. Investigate modern Credit Card solutions. The ones we suggest are UrPay and mx51. Let us know here and we will put you in contact with the correct people

• Incentivise Debit card/Cash - Promote alternative payment methods like cash. Simply advertising that a small fee will be charged without money works well.

The bottom line is retailers should start reviewing the situation. 

With so much money coming through with EFTPOS and Credit cards into a shop, a reconciliation is crucial for managing a small business's finances. Once you do it, you can only then assess how often to do it.

How to do an EFTPOS and credit card transactions with your POS System.

Download Transaction Reports

Get detailed transaction reports from your EFTPOS and credit card provider. This will show all transactions that have gone through their systems for a certain period.

Go to your POS Reports 

You need to export a report from your point of sale (POS) system showing all EFTPOS and credit card transactions recorded there.

Cash register reports > Sales Register > EFTPOS and Credit Card Settlement (Excel)

If you do not have Excel. Get OpenOffice. It's free and good.

This will give you the transactions recorded in your POS by dates.

Reconciling transactions

Now comes the reconciliation part. Compare the amounts, dates and transaction numbers on the provider reports to the transactions in your POS report. Look closely for any discrepancies between the two.

One thing to remember is that transactions may show on different days between the reports. There will be a reason. What you tend to see is too few transactions on a day and then they appear shortly after. There is not much we can do about it, but you may want to take it up with your EFTPOS and credit card provider so you know why it is happening.

Use our Excel sheet as a Reconciliation Spreadsheet

Record your findings in a reconciliation spreadsheet. Document any discrepancies or issues you find. This creates an audit trail you can refer back to.

Resolve Discrepancies with Providers

If you find any concerning discrepancies, contact your EFTPOS or credit card provider to clarify and resolve them. Get them to confirm or correct any potential errors. Generally, they are helpful. Often you may have to wait a few days to get an answer. If a discrepancy can't be resolved, contact your accountant. Don't just leave an unexplained difference.

Transaction reconciliation

Based on feedback from your provider, make any adjustments needed in your POS and accounting records. Then complete reconciling your EFTPOS and credit card accounts.

Keep Records for ATO

You may sometimes need to keep reconciliation records for the ATO. 

Reconcile Frequency

Decide how often you must reconcile. Frequent reconciliation makes it easier to pick up and query issues while details are still fresh, but it does add to the work. I would strongly suggest that monthly or quarterly is better than none. We do it monthly. 

Reconciliation Provides Essential Financial Clarity 

While reconciliation requires diligence but can be tremendously valuable for small business finances. 

Let me know if you need other tips for streamlining your small business's EFTPOS and credit card reconciliation! I think you will find doing a reconciliation is well worth the effort if only for your peace of mind.

Recently, we negotiated excellent rates for Visa and EFTPOS transactions for our customers. Details are here.

Unfortunately, one of our competitors made some misleading comments in response to me on the time it takes for funds to be cleared into a merchant's account after a customer transaction. As this is an important issue, I will explain the process so you understand the problems, the big problem, and where people are being misled. I will use EFTPOS, but the situation is similar to MasterCard and VISA, although rarely as much of a problem.

As a rule, the people you deal with are often the agents for large financial companies who do the actual EFTPOS.  These can be eftpos Payments Australia or huge multinational companies. For example, Fiserv, which I will discuss below, had approximately 44,000 employees worldwide on December 31, 2021, and works in 100 countries.

Now this image below will explain how it works generally. 

In a typical EFTPOS transaction in Australia, the money flows through three main organisations:

- The customer's issuing bank
- The EFTPOS network's custodial settlement account 
- The merchant's acquiring bank

There may also be other intermediaries involved.

The process happens in several steps:

1. The customer taps their card at the merchant's terminal, which is virtually instant.

2. The terminal requests authorisation from the acquiring bank, taking just seconds.

3. The acquiring bank authorises the transaction in seconds by checking with the issuing bank. 

4. Authorisation is returned to the merchant terminal within seconds.

5. The transaction completes instantly from the merchant's perspective.

6. Funds are transferred into the EFTPOS network's custodial account, either same-day or next-day depending on cutoff times. 

7. The EFTPOS network reconciles and okays the funds the next business day.

8. Finally, the funds are transferred from the custodial account to the merchant's bank account. This often takes 1-3 business days.

The delay in step 8 is a big problem, so I highlighted it and marked it with a red arrow above. It may take three days if the custodial and merchant accounts are with different banks. 

Some people, as here, emphasise the fastest scenario as usual, e.g., quoting as if your bank account is the same as their custodial account, but I think this is often misleading. 

Conclusion

You need to research and understand this settlement timeline when evaluating EFTPOS providers. Ask a detailed question to get the total elapsed time from the point of transaction to the money in your account to manage your cash flow appropriately. This can save you considerable frustration down the road.

"The customer taps and dashes, but your money may move at a snail's pace through the system."

Experiencing an EFTPOS/credit card processing outage means your business cannot accept card payments resulting from a system malfunction. Such occurrences can be aggravating and financially disastrous. 

Payment cards are the most commonly used retail payment method in Australia, and debit cards are increasingly preferred to credit cards for many transactions.

Based on my experience, such an outage can cause a typical retailer to lose about 50% of their business. Many people today do not have cash on them. They cannot buy if they cannot use the electronic funds available.

You should be prepared for that, as although such outages are rare, they are actually more common than many realise. Here are the ANZ outages recorded yesterday. Many of these will be EFTPOS and Credit Card problems. If I made a bet with you that next week, someone would report a problem with EFTPOS, and I would probably win.

They can occur due for many reasons; in our experience, the most common reasons are: 

>Power outages 

>Telephone and Internet service disruptions, do not believe the Telecom quoted figures; they go down much more than they say.

>Hardware or software failures, ultimately, the EFTPOS works through mechanical devices, and it is only a matter of time before they fail.

>Human error, a dropped EFTPOS unit broke a few days ago.

Whatever the reason, having such an Outage can affect your sales, customer service, and reputation. 

The leading three EFTPOS providers we work with are, so these are the most important to our clients so that I will quote these as examples.

> Tyro

> WestPac through MX51, although now the MX51 interface is so popular it is moving into other banks.

> UrPay

How to Prepare for Such Outages 

Here are some points you can prepare:

Make sure you have alternative methods of accepting payments, such as cash or checks. 

Local mode 

This means the unit can work when the internet or mobile data goes down. We had a client in an area where the internet and telephones went down, but the EFTPOS kept working as it could use mobile internet for electronic payments.

So check with your EFTPOS provider if they have given you local mode. Note that not all local modes are the same WestPac; for example, has automatic switching so often in an outage you will not even know it's happening. Tyro has a local mode, but it's manual, and you will almost certainly need their support to activate it. The other advantage I like is that WestPac is everywhere with local support. Not having to send units to the head office in Sydney for replacement by post is a big plus if you are not in the CBD in Sydney.

UPS

If power is a problem, consider investing in a UPS (Uninterrupted Power Supply) to keep your system running during power outages. These as well protect your electronic devices from power issues. Today, UPS units are more affordable than ever, providing excellent value for money. Please consider this to keep your system running smoothly during power outages.

MOJO Payments

In addition to cash and checks, consider having an option like MOJO payments. Although this comes with additional costs, it can be helpful in emergencies.

Spare EFTPOS units.

Often the problem is on one terminal. The others may function correctly. It may be worthwhile to have more than one terminal. Urpay, for example, offers EFTPOS terminals with no fees on many of its plans. having an extra terminal can be a plus, in everyday operations.

Here are some steps you can take to handle credit card processing outages:

When an outage occurs, you must act quickly and calmly to minimise the impact on your business. Try to establish where the actual problem is:

> If it is the computers, contact us.

> If your computers are working, they are probably the internet/mobile or the EFTPOS provider. 

>Communicate with your EFTPOS processor. 

They can tell you if the problem is them and whether it is local or widespread, and how long it might take to fix it if it is them. They can also advise you on offline terminal options.

>If it is the internet/mobile well, contact these people and ask for an ETA 

>Communicate with your customers. Let your customers know about the outage. Explain the situation and offer them other ways to pay, such as cash or check. 

> Keep detailed records of the incident, including when it occurred, its duration, and whom you spoke with. Insist on being quoted the incident number for your reference. Large companies are notorious for losing track of your problem.

Conclusion

Handling credit card processing outages requires proactive planning and quick response.