Online EFTPOS taking off

It’s more than a glimpse of the future – paytech experts Worldline say the increasing use of open banking product Online EFTPOS is opening the door wider to more cost-effective and easier payments.

Online EFTPOS use grew by 46 per cent in the 12 months to the end of 2022, according to provider Worldline, and is “just the beginning” of what the open banking framework can do for consumers and businesses, says Jo Phillips, Head of Online Payments at Worldline.

Recently the product has gained significant momentum among Kiwi shoppers and across New Zealand’s major websites.  Phillips says more than 610,000 unique local shoppers have used Online EFTPOS to date.

Online EFTPOS appears as a payment option at checkout on a retailer’s website. Shoppers simply enter their phone number and a payment request is sent to their existing bank application.   The shopper then opens their bank application, approves the transaction, and the payment is almost instantly completed.  The shopper’s online banking credentials are never shared or exposed to any third party, thanks to the open banking infrastructure that underpins Online EFTPOS.

Once shoppers have used Online EFTPOS once, they tend to look for opportunities to use it again, says Phillips. While Online EFTPOS was originally aimed partly at young consumers (who are less likely to have credit cards), one of the biggest drivers of user awareness has been adoption by Auckland Council, who gives their residents the opportunity to pay their rates using Online EFTPOS.

That tends to suggest an older and more financially established market segment adopting Online EFTPOS, she says: “Auckland Council has introduced Online EFTPOS to a whole new audience. We’ve had a lot of positive feedback about the user experience and repeat use is very high.

“New users tell us Online EFTPOS is fast and easy to use, and they feel it’s secure because they’re approving the payment in their banking app. They only have to remember their phone number, there’s no codes to wait for, and they can shop without having a credit card in front of them.”

Not all payment methods are as secure as others.  Some popular choices require consumers to hand over their banking credentials – effectively breaking their terms and conditions agreed with their bank, she says.  Online EFTPOS securely locks that door, with open banking supporting safe sharing of information when consumers have requested the transfer of data. This means Online EFTPOS allows for a bank debit from a shopper’s account without using older screen-scraping technology or requiring a security code to be texted, received and entered.

“This is the first truly open banking payment product in New Zealand and it’s a steppingstone for more innovative products,” Phillips says. “The future of payments is about lower fees for retailers, seamless and safe payments for shoppers, and more choice and better access for everyone. Online EFTPOS is demonstrating how this can be a win-win for Kiwi businesses and their customers - and it’s just the beginning of what open banking can deliver.”

Retailers are seeing inflation driving up supplier costs, consumers are feeling the pinch, and retailers appreciate any opportunity to reduce their outgoings, Phillips points out. Online EFTPOS transaction fees are 1 per cent of the transaction value, around half the total price of most online credit card transactions.  This can help retailers cut costs, boost online sales and attract a new segment of users.

Phillips says some retailers have reported higher online sales rates after adopting Online EFTPOS as a payment option. She believes it can help reduce the issue of shopping cart abandonment, since consumers just need to have their mobile phone to hand, not their credit card.

It also provides a way to pay for people who don’t have credit cards, or debit cards. Businesses like Restaurant Brands, Skinny, and Burger Fuel were early adopters of Online EFTPOS.  Their frequent low-value transactions have seen a natural fit with customers accustomed to using a traditional EFTPOS card. Retail powerhouse PB Tech came on board in 2021, processing high volumes of transactions across a range of price points.

“International data indicates that young consumers are less likely to have credit cards, so this provides retailers with a new segment of online shoppers,” she says. “That was what originally drove our local team to develop Online EFTPOS back in the early 2010s, because we wanted to make transactions easier for shoppers and cheaper for retailers. It’s more than a glimpse into the future of how we buy.”

In addition to cost savings, Phillips says retailers appreciate the overnight settlement, which improves cash flow. Retailers are also protected from abuse of the chargeback process, because it puts them in control of the refund process.

“With all four major banks now on board, almost every New Zealander can use Online EFTPOS through their banking app, which is fantastic,” Phillips says.

Worldline provides 24/7 support for retailers, and the technology ensures the highest levels of fraud detection and security.

Learn more about Online EFTPOS.