The Australian mobile payments space is set to get a major shot in the arm as payments giant Square launches its tiny contactless card reader in the first country outside the US.
Unveiled this week, Square's $59 palm-sized contactless reader is designed to accept tap-and-go payments from shoppers' smartphones supporting Apple, Android or Samsung Pay. It also accepts Visa payWave and MasterCard PayPass contactless cards, along with the ability to process chip-and-pin transactions which exceed the tap-and-go limit.
The payments service launched its original Square Reader in Australia back in March, only supporting chip-and-pin and magstripe card transactions, but the new contactless reader is a natural fit for the local market, says Square's Australian country manager Ben Pfisterer.
Australia is an early adopter of tap-and-go payments, with a high penetration of contactless credit cards in wallets and compatible tap-and-go terminals in stores. As a result contactless payments already make up around three-quarters of over-the-counter card transactions, Pfisterer says. The figure was even higher during Square's three-month Australian contactless pilot with 20 merchants.
"Australia has followed a very smooth path towards contactless payments," Pfisterer says. "We were on magstripe for many years and then moved to EMV cards (Europay, MasterCard, and Visa) with a built-in microchip for heightened security, and now which we're making a smooth migration to contactless and mobile payments which sees us lead the world."
"It was a very different story in the US, where magstripe hung around for a long time and it looks like the US might leapfrog over contactless cards and move straight to mobile payments like Apple Pay."
Square's new palm-sized contactless reader connects to a retailer's Apple or Android device via Low Energy Bluetooth in order to process transactions. The reader has a built-in battery, allowing staff to process purchases away from the counter, with Square selling an optional $39 charge dock.
The pricing model is designed to entice small businesses – apart from the upfront cost of the card reader, Square only charges businesses a small percentage per transaction and there are no ongoing fees.
"Square is clearly opening up new markets, we already have thousands of customers in Australia using the original Square Reader and we've found that 80 percent of them weren't using a traditional card acceptance terminal before they signed up with us," Pfisterer says.
"The other 20 percent obviously felt that their existing card payment solution wasn't a good fit in terms of pricing or functionality."
Square's advanced features include the ability to issue electronic invoices directly from the Apple/Android device connected to the Square Reader. Invoices can be sent to an email address or phone number, if the shopper hands over these details at the time of purchase, and they are stored within the system so future invoices can be sent automatically.
"It's a feature that goes above and beyond the traditional credit card terminal and shoppers have been quick to embrace it, they're electing to receive an electronic receipt after two-thirds of our transactions," Pfisterer says.
Square also offers free analytics tools to all customers, giving small businesses advanced insight into customer behaviour which has traditionally only been available to big businesses.
"Because small businesses are so busy, they often focus on just getting the product or service out there and somehow getting customers in the door," Pfisterer says. "They forget to look back at their sales history in search of insight – they might know they collected more money today than yesterday, but they have no idea why."
"We've found that Square's small business customers are really sinking their teeth into that data, learning a lot from their sales trends so they can go on more than a gut feeling when making important business decisions."