Another Spectrum

Personal ramblings and rants of a somewhat twisted mind


The end of a (financial) era?

New Zealand’s isolation from the rest of the world has resulted in some unique evolutionary developments. This is true for more than just our fauna and flora. It also holds true in the business world. Whereas in most parts of the western world eBay is a household name, many NZers haven’t a clue what it is. However, we all know what TradeMe is.

Then there’s our eftpos system. For 30 years NZers have enjoyed free electronic transactions through eftpos, where payments are made by transferring funds directly from the purchaser’s bank account to the retailer’s bank account at the time of purchase. Who the purchaser or retailer banks with is irrelevant. All that is required is a plastic card and a PIN number for the purchaser and a cheap terminal for the retailer. We don’t think twice about using eftpos for purchasing items costing as little as one dollar (or less).

I, like a lot of NZers, never carry cash. I carry a single card which doubles as my credit/debit card and as an eftpos card for my personal and business bank accounts. An eftpos transaction is often cheaper than cash. If I purchase an item valued at $4.98, I pay $4.98 via eftpos, but $5.00 if paying by cash as the smallest coin denomination is 10 cents.

But all this is about to change.

Visa and Mastercard, which have a virtual duopoly on the credit/debit card market, are strongly pushing their “contactless” wave and pay technology. That in itself is not a problem. I can see the convenience of not having to remove a card from my wallet and entering a PIN. The problem is that Mastercard and visa own the pay and wave technology and won’t allow it to be used for eftpos transactions.

Currently, eftpos is universally available. Every dairy and café accepts eftpos but many do not offer credit card facilities due to the high cost of transactions. The smaller the value of their transactions, the less likely they are to offer credit card payments. It appears that all new bank cards are being issued with wave and pay technology enabled and no way of turning it off. Does this mean that I will have to resort to using cash when purchasing a cup of coffee or a chocolate bar? Will the introduction of pay and wave technology be the death-knell of eftpos in much the same way as the introduction of rats, weasels and possums were to much of our indigenous flora and fauna? Or will it spur our inventive genius to evolve an alternative and independent payment system?

Only time will tell.