The way we pay each other and for our purchases is about to be turned upside down to rival the introduction of the eftpos system in 1989, tech experts say.
The change is the widespread adoption of digital “wallets” or apps on phones, which will allow people to pay others in instant person-to-person transactions, as well as buy things, prove their age, their identity and keep their financial information. secured.
An e-wallet company focused on person-to-person payments, Dosh, recently raised $5 million in seed funding.
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The app is free to download and use, but Dosh will take a 1% discount on app withdrawals, at a rate of between a minimum of 20 cents and a maximum of $3.
Dosh co-founder Shane Marsh says instant payment apps are commonplace in Asia and Europe, and New Zealand is lagging behind.
“New Zealand does not have a real-time payment system. The closest thing we have is a wire transfer which at best can take a few hours. We saw the need for something faster,” Marsh said.
Tors Dixon, head of Westpac’s venture capital arm, said the bank was also developing an electronic wallet called Buck. The app will allow customers of major banks to make person-to-person payments, without having to enter a bank account number.
Users will link their bank account directly to the app.
The app is still in development and Westpac has no set date for a public launch.
But Will Miao, head of online payments at Worldline, says digital payment apps are a solution in search of a problem. Worldline is the largest operator of the eftpos payment system.
“From a consumer perspective, the benefit is slim. Of course, the payment is instant, but you also have to transfer your money in the app, which adds another layer to the transaction,” says Miao.
New Zealand is already a global leader in digital payments thanks to our widespread adoption of eftpos, he says.
“You can go to the smallest dairy in the smallest town in the country and pay for the goods using eftpos. Countries where digital payment apps are popular, such as Asia and the United States, are cash-heavy economies with little digital infrastructure. We are actually ahead of the curve.
But Miao says the future of digital payments could offer a huge boon to consumers.
“If a digital wallet took into account everything a wallet is used for, identification, the security of your finances and in one place, customer loyalty cards, it would be a game-changer.”
Miao says Worldline plans to develop an all-inclusive wallet app.
He estimates that e-wallet apps will become the norm over the next three years.
“We need to stop viewing payment as an island. We already have the infrastructure around our payment systems, we can use it to do much more than financial transactions.
Claire Mathews, an associate professor at Massey University, says e-wallets have a lot of potential to change the way people pay for purchases.
Two of the biggest financial game changers in New Zealand history, eftpos and online banking, were embraced by consumers because of the convenience they offered, says Mathews.
“For a new technology to emerge and succeed, it will have to be a game changer, and that usually comes in the form of consumer convenience,” she says.
Mathews predicts that major banks and start-ups will come to the table with new payment technology, although it will be a battle over who builds the best-performing system.
“New players will be at a disadvantage because no one will have heard of them, they will have to build their market from scratch. Banks will have an advantage because people trust them, but they are also running on legacy technology which will also create barriers for them,” she says.
Whichever solution is chosen, banks or standalone apps, the ease of payment offered by this technology should be a benefit to consumers, she says.