Gearing up for a payments revolution

It's the payments revolution that's yet to happen. Since the inception of the credit card, Australians have long speculated over the move towards a cashless society: a world where data transfers dictate the way we pay.

But we're half way there. In 2013, 53 per cent of transactions were paid in cash. By 2018, the Australian Payment Clearing Association expects that figure to drop to 43 per cent. This latest slip in cash payments has come as a direct result of the rise of contactless card payments -- like Visa's payWave and Mastercard's PayPass. Given this, the total number of cash payments could fall faster than predicted, with the right technological push.

So far, the biggest barrier for the trend has been mobile payments -- a technology that could abolish our need for a wallet and potentially our need to always carry cash. Samsung and Google have their own versions of digital wallets, but the trend is yet to take off in Australia. Experts say this is largely because it was missing one key ingredient: Apple.

Onlookers have great expectations for Apple's new payments system: Apple Pay. Silicon Valley venture capitalist Marc Andreessen believes it is the next technology that will displace the financial services sector. Closer to home, Woolworths CIO Clive Whincup suggests that when Apple Pay does finally reach Australian shores, it may have a similar uptake curve to contactless card payments.

However, much of the wider Australian retail community is yet to embrace the growing digital payment trend. According to the CEO of the National Retail Association, Trevor Evans this evolving payments ecosystem is “is not the largest consideration for retailers”.  

His reasoning: “The payment experience is going to be a small part of the customer's whole experience”. For some retailers, the move to a cashless operation could redefine the retail experience.

The introduction of Apple Pay completes speculation that emerged last year when Apple announced another new product, the iBeacon.

It's possible that with both Apple Pay and iBeacon in the market, a retailer could operate a store without the need for cashiers or service staff. Transactions are simply processed on the customer's phone, and the retail store becomes a form of glorified showroom.

In anticipation of this scenario, some Australian retailers are considering a move to a contactless payment only model. For instance, Australian retailer Shoes of Prey, is set to trial a contactless-only approach to payments in its new standalone store, launching in Sydney in November. It's also offering shoppers the option to pay through their website, using in-store iPads rather than at a register.

For most however, this form of retail may still be a fair way off. Co-founder of Tyro Payments Andrew Rothwell says there is still a need for Australian retailers to “step up and support contactless implementations”. To do so, retailers need to upgrade their current EFTPOS set-up to allow for card-based contactless payments. Apple Pay and rival payment systems use the same technology.

Despite this, Rothwell is optimistic about the future of mobile payments.  He says it “makes more sense to use your phone to pay,” using only contactless payment “is where the world is ultimately going to end up”.

The NRA's Evans concedes that retailers need to “do things differently to compete with online and offshore prices”. But the retail industry as a whole is perhaps missing the transformative implications of this technology. Apple's iTunes ecosystem went on to forever change the music industry.

Apple Pay and the cashless movement could do the same to the retail sector. The signs are clear, but will our retailers see this revolution coming?