Australia’s domestic card scheme, eftpos, has been transforming its product offering over the last two years beyond just supporting card-based payments at point-of-sale to a digital business.
Released in March, eftpos’ 2021 Product Roadmap update aims to drive payments competition and improve consumer experiences in Australia’s fast-growing digital economy. It outlines delivery timeframes for a suite of initiatives including in-app payments, enhanced fraud protection, a digital identity network, mobile wallets, QR codes, APIs and fintech access, and eftpos online payments.
Payments Consulting Network Managing Director Mangala Martinus caught up with eftpos CEO Stephen Benton (now former CEO) to discuss the company’s transformation program, key initiatives and some of the challenges that lie ahead.
You can read the highlights of the conversation below.
Please provide a brief high-level overview of your business
- eftpos is a ubiquitous payments network and an essential part of the national payments infrastructure, committed to providing efficient, safe, cost-effective and market-specific payments solutions for the benefit of all Australians.
- The Company’s Purpose is simple – to do good for Australia.
- To that end, eftpos believes it can greatly assist the Australian finance sector and broader economy to thrive and grow by providing low cost access to our network and payments capability over our national, real time processing infrastructure.
- Further, low cost access, mobile payments capability, our ability to issue tokens, and the work we are doing with industry around real time digital payments and a ubiquitous Digital Identity solution, have the potential to bring many FinTech solutions to life.
- eftpos recently released its Product Roadmap 2021 Update, which aims to drive payments competition and improve consumer experiences in Australia’s fast-growing digital economy.
- Based in Sydney, we currently employ around 160 people, and work closely with financial institutions, retailers, regulators, governments, technology partners, FinTechs and industry associations to deliver products and robust systems that are changing the way Australians pay for the better.
What are your key products and services?
- With more than 51 million eftpos-enabled debit cards in market, we are a household name among Australians and we are increasingly moving into digital.
- We offer the convenience of real time balances and simple, secure payment solutions ranging from point-of-sale debit card payments and instant cash out to mobile payments via digital wallets such as Beem It.
- For businesses, we enable Least Cost Routing, which directs all of a merchant’s contactless debit card payments to the most cost-effective channel, meaning they could reduce their contactless debit transaction costs. We believe all merchants should be offered this service as a default option.
- We have a very clear strategy, led by our purpose – to do good for Australia.
- The strategy focussing on diversifying our business and investing in digital payments experiences.
- As such, we are moving from a point-of-sale company to a key player at the centre of the digital ecosystem, we have a well-defined product roadmap comprising five key elements: mobile wallets; eCommerce; Digital ID via connectID; APIs and FinTech access, and our QR acceptance and experiences platform.
- connectID is an identity hub for the Australian digital ecosystem, delivering a seamless consumer experience and making it easy for merchants and governments to share, store and receive personal identity info online.
Who are your key clients and end users?
- Our key relationships are with our 129 financial institutions across the country, retailers and FinTechs.
- Our end users are the millions of Australians with debit cards, plus people who use the Beem It app. We envisage this will expand as more of our digital technology initiatives roll out.
- For example businesses and consumers who will use our new connectID digital identification services and payments using QR codes to enhance the shopping experience with rewards and loyalty offers etc, among other things.
What do you see as your key strengths or differentiators relative to other card schemes?
- Our core strength is that we are a ubiquitous national payments network that enables real time debit payments across the economy – making life easier for businesses and consumers. In contrast to other schemes, eftpos is owned and operated by Australians, and our transactions are reliably and securely processed in Australia using local infrastructure.
- Debit cards are by far the most popular payment choice for Australians as they move from cash and credit in what is a long-term trend and growing every month.
- We are driven by the reason behind our existence, which is to do good for Australia, and are rapidly innovating, bolstering competition, extracting additional value from the payments ecosystem and optimising unique payment experiences for our market.
- Another one of our core strengths has been our ability and agility to change and innovate rapidly as shown by the evolution over the last 3 years into digital.
- And of course our trusted brand – that Australians have known for more than 35 years.
What were your key achievements over the last 12 months?
- The last year has been a time of tremendous activity covering a raft of improvements and new initiatives that are delivering numerous benefits to Australians and the business community.
- Perhaps one of the most important news was our acquisition of Beem It, the Australian payments app that enables consumers to send and receive money using their phone in seconds, regardless of who they bank with. This was a logical move for us as a trusted Australian payments brand that has access to hundreds of thousands of Australian merchants, millions of consumers, and is quickly moving into digital payments. It was part of our strategy to diversify and move further into the digital ecosystem, and especially relevant at time when Australians are rapidly moving much of their daily lives to mobile.
- Our digital economy solution, known as connectID, recently went live and is now running as a standalone FinTech and fully owned eftpos subsidiary. This is a landmark development aiming to make it easier for Australians to share, store and receive personal identity information online. On a related note, we’ve also applied to become the first non-government accredited Trusted Digital Identity Framework (TDIF) exchange in Australia.
- We have also announced details for a national QR code payments orchestration rollout, with the aim to provide Australian consumers and merchants with better data-rich payments experiences no matter where they choose to shop – online, on their mobile or at the checkout. It’s designed to be low cost and facilitate many value added opportunities for merchants and consumers, seamlessly linking loyalty, offers, receipts and more, while also driving deeper customer engagement. The trial is starting soon, and the national rollout is expected to be completed in 2022.
- Carrying on the support for consumers and merchants, we launched a new digital payments capability which aims to boost productivity for businesses by enabling funds to be both deposited or withdrawn from an account in real time. This Deposit and Withdrawal messaging capability saw payments app Beem It the first to launch using the message set, which could also be used for a range of productivity-boosting peer-to-peer or business-to-consumer use cases such as insurance payouts, government disbursements, rebates or instant payroll.
- We established a FinTech advisory committee in collaboration with FinTech Australia, as a way of giving FinTechs a direct say in how they can access and leverage the eftpos payments network for the betterment of Australia’s digital economy. This involves representatives from various FinTechs holding workshops with us to explore ways to streamline access to our network, followed by a formal report to be presented for our consideration and action. We are in the process of publishing a report that captures the work of the Committee and plan to continue for another 12 months among other key recommendations.
- On the marketing front, after the unveiling of our new-look logo, we launched a new brand campaign platform, ‘your money, well spent’, with the idea centred around championing living and spending mindfully as a key aspiration for Australian millennials. The campaign started in March and came to life over several months through an engaging and educational national campaign with contextual placements across screens, out of home, digital and social.
- Finally, looking to the future and outside of Australia, we partnered with US-based Hedera Hashgraph, which is backed by Google, IBM and Deutsche Telekom among others. We actually joined the Hedera Governing Council and will run the country’s first Hedera network node this year. Similar to blockchain in some ways, the Hedera network is designed to be the most decentralised governance model for a public ledger. The Council includes a group of highly diversified organisations overseeing a global network of nodes aiming to enable low-cost micropayments for various uses such as the Internet of Things and access to content streamed over the internet.
What key innovations do you have on your product/service roadmap for the next 12 months?
- We have a very clear strategy, led by our purpose – to do good for Australia.
- The strategy aligns around three parallel areas of focus, all underpinned by better customer outcomes. The first is to maintain strong volumes and revenue to fund investments, while the second is to concentrate on catching up on areas of core capability and advancing solutions that support our digital future. The third is the most ambitious and forward thinking, namely, to diversify our business and invest in digital payments experiences aligned to our purpose.
- Regarding the latter and our move from a point-of-sale company to a key player at the centre of the digital ecosystem, we have a well-defined product roadmap comprising five key elements: mobile wallets; eCommerce; Digital ID via connectID; APIs and FinTech access, and our QR acceptance and experiences platform.
- One upcoming example of this strategy in action will be the launch two new eCommerce anti-fraud tools by the beginning of November this year, aimed at helping Australians make more secure payments online. Network Fraud Scoring will help financial institutions assess the risk associated with individual transactions, while eftpos Secure (EMV 3-D Secure) is two-factor authentication for consumers, helping reduce risk for both consumers and merchants.
- More information about all of this is available on our website, and of course we are happy to talk to partners and FinTechs is more detail as various initiatives are rolled out.
What industry changes or trends do you see occurring over the next 2-3 years that will have a major impact on your business and/or your clients?
- One positive trend that continues to play out is Australians’ increasing use of debit cards. People have learned that debit is a good way to manage their finances and look after their money, and makes sense compared to running up debt on credit cards, for example. Obviously this is playing out increasingly in the digital space, as a world of new online and mobile services and products come to market.
- The increasing focus on security is also a key issue. Our connectID platform acts a kind of broker between identity providers and merchants or government departments that need to verify who they are dealing with. We are uniquely placed to offer this service, particularly for interactions requiring a payment, because of our links to bank accounts and real-time direct deposit and withdrawal.
- Initiatives like this will be a key driver of our future business and corporate evolution, and from there it’s relatively straightforward to envisage how the example outlined above could also incorporate micropayments across a distributed network.
What key industry challenges are you dealing with today and how are you addressing them?
- An important industry challenge we are addressing right now is the RBA’s Retail Payments Review which is likely to conclude in August or September.
- There are key issues being considered including Least Cost Routing – which we believe should be the default option provided to all merchants, and a proposed move to allow banks outside the Big Four to issue Single Network Debit Cards, damaging competition in the market by favouring overseas companies at the expense of Australia’s very own debit card scheme.
- It’s our strong view that Multi Network Debit Cards are the basis of competition for the most widely-used payment mechanism out there, and are also central to the ongoing rollout of Least Cost Routing, which gives merchants choice and the ability to process transactions according to the lowest cost network.
- Any move to single network will also see consumers losing access to services such as cash out at most merchants, real time Medicare refunds and Beem It.
- Given the huge number of transactions and the significant differences in the fees charged by eftpos compared with the international schemes, the cost of not using the least cost network can be significant for businesses.
- In the future, if there is no choice for a merchant, the significant risk is that costs will go up because there is no competition. This is a genuine threat to Australian businesses, plus the consumers who will lose out when the costs of higher fees are passed on to them.
- We are currently working with a wide range of concerned stakeholder groups, especially in the small business community, who have a lot to lose here. We are presenting our views to the RBA and other government stakeholders, and encourage anyone who shares our misgivings to do the same – the RBA needs to take immediate action here and do the right thing for Australian merchants and the public as a whole.
- It’s our view that Dual Network Debit Cards must be mandatory as part of every bank’s social obligation to competition in Australia – and that Least Cost Routing should also be the default option for all merchants in all payment channels, including tap and go, mobile wallets, and online transactions.
Are there other topics that you would like to discuss?
- Mobile and online payments are areas that also need attention and regulation, as they are growing quickly and do not offer merchants the same choice as physical cards at POS.
- Competition in these area needs to be addressed as a matter of urgency, and the principles applied should be the same as in the physical card world.
Author: Mangala Martinus, Managing Director, Australia, Payments Consulting Network and Merchant Advisory
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