Small businesses in NSW have been using contactless payments for close to 10 years but COVID-19 has accelerated use of the technology and the demise of cash.
Last year, ‘tap and go’ and online payments became the main, and preferred method of payment offered by small business due to the COVID-19 pandemic.
Public Health Orders to maintain social distance and limit person-to person contact saw businesses who were not already offering contactless payment adopt the technology, introducing contactless pay terminals onsite and in store, and enabling online card payment transactions through their websites. In April 2020, the payment industry increased the PIN limit for contactless card payments from $100 to $200, to reduce the need for physical contact with the payment terminal.
While contactless payment technology has helped small businesses provide faster, more efficient and effective service to customers and suppliers, its growth, and a recent major outage affecting one network, have also highlighted the risk to businesses of their major payments system going down.
The Commission received representations from small businesses raising concerns in relation to a recent high-profile outage of merchant payments facilities, impacting approximately 32,000 businesses across Australia. Concerns from small business related to:
• The duration of system outages and the experiences of some businesses who encountered significant delays in systems returning to normal operation
• Processes for small businesses in accessing compensation for consequential losses associated with system outages
The Commission observed that businesses impacted by the outage were frustrated and concerned by the lack of a transparent process through which concerns could be addressed and compensation sought. This was especially true for small businesses, who were more likely to only have one Point of Sale (POS).
To address these concerns, the NSW Small Business Commission has made three recommendations to assist small business in using ‘tap and go’ contactless payment technology in a submission to the federal government’s Payment Systems Review. Importantly, the Commission is recommending a service guarantee as a mechanism to:
• Establish minimum reliability standards expected of providers
• Promote greater awareness among small businesses of the potential for outages
• Identify actions small businesses can take to mitigate the impact of outages
• Provide equitable, consistent and accessible compensation for small businesses
• Promote competition for the provision of these services
Other recommendations made by the Commission include:
• Actions to place downward pressure on merchant service fees by promoting low-cost routing
• Empowering small business in the market through a data right to enable more effective competition
To view the submission, click here.