Faisal M Omar, Payments Consulting Network: "Mobile payments in Australia – What are we waiting for!? "

Australia claims to operate one of the most advanced markets for financial services. It has a robust payment infrastructure, one of the largest contactless card acceptance network in the world, a massive and enviable smartphone and internet penetration amongst its population – albeit geographically spread out around the major cities.

We have all seen the numbers being published report after report about the growing trends in mobile shopping in the country. Up to 30% of Australians use the mobile devices for shopping online and over half of these continue to do so on a monthly basis. Almost all the major retailers and merchant are currently “mobile-enabled” and offer in-app purchases from random things like insurance renewals, groceries, and order-ahead coffee. Why then have we still to see any traction when it comes to mobile payments?

The Big 4 banks and the financial services pie
Having grown up in East Africa, for example, owning a bank account was always limited to a lucky few (before M-Pesa disrupted the industry). However, in the opposite pole, the Australian public seems to be over-banked with a huge array of services and products. The banking industry is mature enough to offer a massive network of ATMs and bank branches even in the remotest regions of the country. Today, mobile banking is offered by default and despite a very advanced direct debit infrastructure, a large proportion of banks have significantly invested in cards and the contactless network.

As a consequence of this domination of the investment and innovation around financial services, a very high barrier of entry for any potential disruption or advancement in the industry has been created. Although some collaboration is visible in policy definition and building common platforms, such as the new payments platform, most of the banks still compete for a very saturated, significantly smaller and possibly over-cooked pie. Over-cooked because it feels that consumers are not as hungry for new innovation from banks – it often seems too much, too soon.

Consumers and merchants at large have only just started getting used to the contactless infrastructure and since August 1 this year, PINs have replaced signatures at point-of-sale. Now all of a sudden, they have to start adapting to the new technology advances of mobile contactless payments. Bearing in mind the relatively aged demographic of the banking population it is easy to see why adoption to new technology will not be so forthcoming.

Telecom’s sitting on the bench
Furthermore, MNOs have been playing a relatively passive role to the whole mobile payments game right from a time when it was becoming the norm in other markets. All pilots around contactless and NFC were dropped like a hot plate as soon as HCE and tokenization talks started surfacing about a year ago. Wallets and other loyalty based trials were also put on the back burner due the lack of business justification and possibly the lack of interest from the common telecom customer.

Now with the emergence of Apple Pay (and the rather dubious Apple SIM, which allows consumers to change network providers without swapping the SIM card) and disruptive merchant and vendor led alternatives, operators are faced with a critical opportunity loss if they don’t somehow get involved.

The emergence of Fintech Innovation
Additionally, Australia breeds a growing and active fintech and startup scene that has always been pushing the envelope when it comes to payment innovation. These smaller players cannot be ignored because despite fragmented product launches, a significant growth in building alternative payment options on the mobile and different payment applications is clearly visible. From Bitcoin startups, to mobile loyalty and mPOS, order-ahead apps, and social payment applications etc. have been in the news over the last year targeting much of the millennial generation who live off innovation. It is encouraging to see such ambition, but grass root support is required from higher powers. Which brings us to the next point.

Government regulation – or lack of it
Finally, the roles that the regulators and government, be it federal or state, play in pushing for mobile innovation around payments is quite lacklustre compared to other emerging and advanced markets. Agreed, that there is little to regulate if everything is being managed well by the traditional ‘owners’ of the financial services industry but as with a recent press article from the RBA asking stakeholders to ‘move it or else’ over the lack of interest in building overlay services on the new payments platform – there needs to be constant pressure along with incentives and encouragement for banks and other players to continuously innovate in the mobile payments space.

In Dubai for example, consumers are compelled to transact with the government over mobile apps and process payments for transport, medical services, administration, utility services leading to the quick adoption of mobile payments. Unlike the Australian scenario, this uptake was largely driven and led by the government to encourage a more efficient and cost-effective mobile strategy amongst banks, telecoms and government ministries.

Summary
There are some great services out there such as EFTPOS, BPAY which have been inherently developed for the Australian market as well as various contactless / NFC trials which are at the moment largely led by the big banks. However, a solution that works well isn’t necessarily the best one. Universal acceptance and access is key for mass adoption.

There is still fair ground to be covered before we notice the tipping point into mobile payments in Australia. The infrastructure exists. All the numbers add up. Something or someone needs to move. Quick.

About the author

Having worked in the payments industry for over 15 years, Faisal has provided his insights and product knowledge to various payment initiatives across four continents. He has held senior roles in organisations in the digital and financial services space as well as founded and setup several start-ups within the online and mobile industry. Faisal is currently engaged as a mobile payments consultant with Payments Consulting Network in Sydney, Australia.

 Company description

Payments Consulting Network is an international team of experienced payments industry consultants working collaboratively together to create value for our clients across Asia Pacific. We work closely with our clients throughout the engagement - from strategy development to project delivery - by bringing together our network of specialist payments industry consultants, on an as-needs basis, at a price point well below comparable payments consulting firms.