Afterpay and Humm have cards that look like credit cards through EFTPOS terminals. They can be added to a digital wallet for watch and phone tap. It’s only when the retailer discovered the 3.5% and more cost per transaction that they realise the higher cost product has been used.
I’ll leave the social responsibility question of using buy now pay later for lottery ticket purchases for another time.
Since the EFTPOS terminal providers don’t know what’s in the basket they cannot block the transaction. They could. The tech is there to feed this to them. Now, by basket, I mean each transaction – the EFTPOS terminal and the network to which they connect do not know what is in each transaction.
The only real option right now for retailers is to ask each customer about the method of payment. But this will slow transactions at the counter and, likely, lead to shopper frustration and, maybe, embarrassment.
I have discussed the issue with a range of stakeholders and they are engaged with it. It is too early to say if that engagement will lead to change that satisfies retailers – I say this because one outcome could be the removal of BNPL from the channel altogether and I wonder if impacted newsagents would want that.
Retailers accept EFTPOS payments through a connected terminal in good faith. They have an expectation of a reasonable soft of that method of payment. The gap between .75% and 3.5% is too much, too great, especially for items over which the retailer has no control of the selling price.
I have looked at the basket solution as this is what has been established listed for the Indue card here in Australia where people with the card are permitted to spend it in a designated group of items. The tech. block them using the card on non approved product categories.
Some companies manage use of their finance services by not permitting certain retailers in a whole of business approach. The basket approach is better. But, in this instance with lottery products, the cost of implementation in tech. and at the counter in dialogue with shoppers could be problematic.
This is a complex matter that needs discussion.
Thanks for writing about this. I sell lotteries and am frustrated at the differing margin cost between the different types of cards customer present. I hope the right people take notice of this issue. My area manager didn’t get it.
Do some businesses still charge added fees for American Express & Diners Club ? Could that same system be applied here without upsetting too many customers ?
Can the Tyro/retailer system identify a BNPY card automatically? If so, can a transaction fee be applied?
Rod, none of the terminals can currently. They could be made to. I’d note this has only become a problem with the advent of ‘cards’ from businesses like Humm and Afterpay.
I have not specifically allowed Humm and Afterpay to use Tyro in my business. Does Tyro automatically accept them or do I have to specifically approve their acceptance. Humm and Afterpay is something I do not want to accept due to their substantially higher charges which eliminates most of my profit on low commission product like lotto.
Peter you don’t have to as they present as a credit / debit card. I think you’ll find Him and After[pay working with the EFTPOS terminal businesses to resolve this situation where retailers face 4.6 times the fees for taking their cards compared to usual credit cards.