The electronic payment system in New Zealand has experienced a massive shift in recent years with widespread adoption of contactless payment technology (also known as PayWave or PayPass or tap-and-go payment). According to Paymments NZ, contactless payment increased by 62% from 2018 to 2020 jumping to 39% of all payments. The percentage of contactless payment is likely to be much higher at about 59% four years later in 2024. The increase in tap-and-pay transactions has been driven by the convience it offers and the advancement in mobile and wearable technologies, but what does the rise of contactless payment mean for the future of payments in New Zealand?
An era of convenience:
Technologoies such as Near Field Communication (NFC) have helped usher in contactless payment using credit cards and other devices such as mobile phones and smart watches. The ability to tap and pay has revolutionised how Kiwis make payments at payment terminals and sped up the checkout process by removing the need to swipe your card and enter in your pin. What’s more, New Zealanders are willing to pay a few more cents per transaction for this added convenience, but make no mistake, contactless payment systems are just as beneficial to businesses as they are to customers as it improves checkout efficiency and allow them to service more customers. This is perhaps why some of the bigger retailers such as Woolworths and New World choose to take on this cost themselves rather than pass it on to their customers.
Changing consumer behaviour and expectations:
The rise of tap-and-pay has changed our expectation. Most Kiwis now expect to be able to tap and pay with any payment method as standard. Contactless payment don’t only offer convenience but also offer improvement security and hygiene which resonates more with Kiwis in the wake of the Covid-19 pandemic.
Innovation in technology driving advancement:
Although Near Field Communications (NFC) helped usher in contactless payment, a lot more innovation was required to allow for contactless payment using wearable devices and mobile devices. Some advancements included improved security using tokenisation, biometric authentication, mobile wallet integration and digital payment platforms. Credit card companies and technology companies such as Google and Apples are continuing to push the boundary to make payments more seemless.
What does the rise of contactless payment mean for New Zealand:
With more and more customers using contactless payment credit card companies are raking in millions in merchant fees and more merchants are passing on these fees to their customers there are growing calls for limits to be put in place on how much credit card providers and merchants can charge. Currently merchant fees in New Zealand are around 2.5% to 3% but there are reports of merchant fees going as high as 30% yikes!. For an average Kiwi these feeds can easily add up to $300 to $500 per year.
With so many of us using tap-and-pay we are likely to see new legislation introduced in the cominng year putting in place restrictions on how much merchant fees can be charged.
What does the future hold for electronic payments in New Zealand?
Advancement in battery technology such as solid state batteries would soon usher in phones that last a a week before requiring any charge. This advancement could see more Kiwis step out of their homes without their wallet and only their mobile phone or wearable device. The convenience of not needing to carry wallet should not be underestimated and is likely push more Kiwis towards using contactless payment.
Fast foward a few more years we are likely to see embedded computer chips allowing customers to make payments simply by a wave of their hands. However, such tech is unlikely to see widespread adoption due the invasive nature of the tech but also due to religious objections. Another breakthrough might involve facial recognition technology allowing customers to purchase goods without even carrying a device with them. Facial recognition technology might work with other biometric markers such as finger prints to double verify the customer’s identify. This would mean if you forget your phone at home or your battery dies you can still make purchases using your biometric markers instead.
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