Published on 01/08/2017 by Any Business

Small Business to Benefit from New Payment Technology

A new payments app is set to launch in Australia that will offer small businesses a way to take credit card payments on a phone.

The Tap2App app, from US start-up xPressTap, turns any near field communication (NFC) enabled smartphone or tablet into a virtual card reader, without any extra hardware, unlike traditional Eftpos terminals.

The app connects regular users with a merchant account at one of the major banks and enables them to take tap-and-go payments from credit cards or mobile phone through Samsung and Apple Pay.

xPressTap said Australia was the first launch market for the app because of its widespread adoption of tap-and-go technology, which it claims can reduce merchant fees by as much as 25 per cent.

The company believes the technology is suited to everyone from micro businesses to enterprise clients.

Figures show that the Credit Card Processing industry has performed strongly over the past five years, growing consistently over the period.

Australia's rapid adoption of non-cash and contactless payment technology has been a key driver of the industry's growth. In addition, the rising popularity of online shopping and increases in household consumption expenditure and discretionary income have further supported the rising demand for electronic payment and industry services.

Overall, industry revenue is expected to rise at an annualised 3.1% over the five years through 2016-17, to reach $3.2 billion.

Non-cash and contactless payment

A key trend driving growth in the industry has been the adoption of non-cash and contactless payments by both new and established businesses. The adoption of new payment technology, particularly by the major banks, has led to the increased penetration of electronic payments.

The major banks have introduced mobile payment technologies, such as the Commonwealth Bank's Tap & Pay, and provided support for MasterCard and Visa's PayPass and payWave contactless payment solutions. This has further encouraged payment via these channels.

Any transactions conducted through contactless payment is often processed as a credit rather than debit transaction, on which scheme providers generate greater interchange fees and revenue. Rapid developments in electronic payment technology mean that Australia is gradually becoming a cashless society.

Australia is a global leader in adopting non-cash and contactless payments. Cash is expected to have fallen below 50% as a proportion of total payment transaction volume and make up approximately 1% in total payments value in 2016-17.

Transaction value and volumes

Increasing household expenditure and discretionary income coupled with the growing popularity of online shopping have contributed to the industry's growth over the past five years.

Rising household expenditure and growing discretionary income represents an increase in the value of transactions processed by industry operators. This, combined with the increasing uptake of non-cash payment, is expected to provide a boost to the interchange fees generated by the card schemes and, subsequently, industry revenue.

The growing popularity of online shopping has also added to the volume of transactions that the industry processes. However, other forms of payment processors, such as PayPal, have established payment infrastructure in this space and competed with industry operators. Despite this, online shopping has continued to support industry growth over the past five years.

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AnyBusiness

Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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