According to the RBA, well over 95 per cent of in-person card transactions in stores in Australia are made via contactless card payments.
These take place at around 940,000 EFTPOS terminals, as reported by Statista, which means that the payment landscape for consumer spending in the country has pretty much changed forever.
As these types of card payments have brought welcomed convenience and security to the customer, businesses have become more reliant on facilitating them as a way to remain sustainable.
Not so long ago, processing card transactions meant businesses incurred significant costs, including merchant fees and chargeback – which is one of the reasons why there were only 255,000 terminals in 1998.
Thankfully, recent advancements in payment technology have helped them to significantly cut down these expenses and therefore made processing these types of transactions a lot more efficient and cost-effective.
Here are eight ways technology has enabled this to happen.
1. Reduced Processing Fees
Traditional card transactions often involve higher processing fees as a result of their reliance on multiple intermediaries to take place.
However, contactless and mobile payments, such as Apple Pay and Google Pay, use near-field communication (NFC) technology, which not only streamlines the transactional process but also results in lower fees.
Subsequently, by encouraging customers to use these payment methods ahead of other methods, businesses can reduce their reliance on expensive legacy systems and, therefore, benefit from lower transaction costs.
2. Zero-Cost EFTPOS Solutions
Research by the RBA suggests that the average person makes 650 EFTPOS transactions every year in Australia, which translates to multiple millions for the whole population over the course of a year.
For businesses, this can result in them incurring high merchant fees, which can severely impact their bottom line.
However, payment solutions like Smartpay offer initiatives like zero-cost EFTPOS, which allows businesses to pass on the transaction fees directly to their customers or integrate them into more cost-effective processing solutions.
These models allow companies to be more profitable while still providing customers with a quick and secure payment experience.
3. AI-Powered Fraud Detection
Chargebacks are a costly and infuriating problem for merchants who are forking out good money for a payment system that is often advertised as having military-grade security.
When such systems are compromised, businesses get hit with the double whammy of lost revenue for orders or purchases they fulfilled and the additional fees imposed upon them by the companies that supply them with the technology.
Recently though, help has come in the shape of AI-driven fraud detection systems that analyse transaction patterns in real time to identify and stop suspicious activities before they escalate into chargebacks.
Thanks to this machine learning technology, businesses are less likely to be subjected to fraudulent transactions and the hassle they bring.
4. Subscription-Based Payment Processing
Instead of paying per-transaction fee, which traditionally has been the case, businesses are now able to opt in for automated subscription-based payment processors that offer flat-rate pricing.
This model is particularly beneficial for high-volume businesses because it provides them with fixed costs to work with and, therefore, eliminates percentage-based fees that can quickly add up.
5. Blockchain and Decentralised Payment Solutions
Blockchain technology has revolutionised the finance industry by offering decentralised and transparent transactions that come with much lower fees as compared to other forms of payment.
By reducing the need for intermediaries, cryptocurrencies like Bitcoin and stablecoins cut down on processing costs, which means that businesses that integrate blockchain payments into their processes can experience significant cost savings over time.
6. Automated Payment Reconciliation
The manual reconciliation of card payments can be very time-consuming and, unfortunately, prone to human error.
However, automated reconciliation tools integrate with accounting software, which not only makes the process of tracking payments much more streamlined but also reduces administrative costs overall.
Best of all, while improving accuracy, this technology frees up valuable time for business owners and finance teams, which can be put to better use to grow the company.
7. Smart Terminals Optimise Transaction Costs
Something that has been a real game-changer in recent times is the introduction of modern smart payment terminals.
Equipped with cost-saving features, such as dynamic currency conversion, automated surcharging, and real-time transaction tracking, these devices help businesses optimise their payment processing costs by automatically choosing the most cost-effective methods to apply to each transaction.
8. Biometric and Two-Factor Authentication
Other ways businesses are being protected from the threat of chargebacks and fraud-related transactions are through biometric payment authentication and Two-Factor authentication.
The former revolves around personal details, such as fingerprint or facial recognition, that are virtually impossible to replicate, while the latter involves using secondary methods, such as typing in a code sent to your phone or email, to confirm the legitimacy of a transaction.
Both of these methods have proved to be excellent ways to protect businesses from fraudulent activity, often made without their knowledge, and which they had no control over.
