Cashless payments have quickly been embraced in Australia. Yet as the market moves away from cash, two merchant segments are slowing the pace to inches. For payment providers, convincing these businesses to abandon cash may prove difficult.
In Australia cash has been used in less than half of all payments since 2013. Cards, online payments, closed-loop transit payments, and mobile wallets are all driving the shift to a cashless society.
But while progress towards this goal has been swift, some merchants are slowing things down. For low-margin, high-volume merchants the cost of accepting cashless payments – a A$0.20 fee per transaction on top of a monthly fee – outweighs the benefits. Meanwhile, immigrant business owners for whom English is a secondary language are wary of all the documents they need to sign before accepting digital payments.
These merchants are essentially the final obstacle in the pursuit of a cashless Australia, and they will need incentives to overcome their reluctance. While payment providers are not yet desperate to sign them on, we predict that measures such as fee-free acceptance services and introductory periods will be offered in the near future. Whether such incentives will succeed remains to be seen.
By Arnie Cho, Senior Consumer Payments Analyst