As of October 1, Australian businesses are no longer allowed to charge customers an extra fee when they pay by card. However, this doesn't mean the cost of processing card payments has disappeared - it just can't be displayed as a separate surcharge.
Sydney fintech Hello Clever thinks this is a good time to look at a second way for customers to pay: PayID. Co-founder and CEO Caroline Tran says many owners would be surprised to learn they can now be paid digitally without a card.
How PayID works
PayID has been around since 2018, and most Australians know it from splitting a dinner bill with friends. Instead of typing in a BSB and account number, you enter someone's phone number or email in your banking app and the money is sent across.
A business can do the same thing. It sets up its own PayID, the customer pays it from their banking app, and the money lands in the business's account, usually in under a minute. Hello Clever says it arrives already reconciled.
Ms Tran says cards now dominate everyday spending, and she thinks that leaves room for something cheaper. "Cash is now under 8 per cent of what Australians spend. Cards make up more than 90 per cent. But a lot has changed since cards overtook cash, and there are now new ways to get paid," she said.
She also put numbers on the gap. "The average card fee is around 1.5 per cent. With PayID, it's around 0.5 per cent." Those are her figures, so check the rates on your own statement or with your provider.
Best for regulars
Ms Tran is upfront that PayID isn't right for every sale. "For a one-off purchase, I'll admit PayID is more steps than tapping a card. For a repeat customer, it really isn't," she said.
She uses a cafe to explain how it could work. "Say you run a cafe. You could encourage your daily regulars to pay for their morning coffee with PayID, with a discount or other reward for doing it. On a single flat white the saving is nothing. Across a year of regulars, it adds up, and that's money you can hand back to the customer to keep them using it."
Keep taking cards
Ms Tran isn't suggesting anyone drop cards. "I'm not saying drop cards. That's a fast way to lose customers, and any online retailer still needs a card strategy," she said. "Airlines have offered PayID for years alongside plenty of other payment methods. PayID is just the cheapest. Add it as an option, use the savings to make it worth your customer's while, and see what happens."
She also thinks businesses have more say over how customers pay than they realise. Contactless, she says, went from novelty to default in about 18 months, driven by Coles and Woolworths rather than the banks.
"Businesses think the payments industry sets the terms. It's actually the other way around. I work in this industry, and we build what merchants ask us for. If a third of Australian businesses put PayID at the checkout tomorrow, the industry would fall over itself to make that experience slicker," Ms Tran said.
Check your statements
Ms Tran wants owners to treat the October change as a prompt to review what they pay. "The payments conversation has got into the weeds, and that suits the industry fine. Dull and complicated is how things stay exactly as they are," she said. "Treat October as the moment you stop accepting whatever your bank or provider tells you. Pull your last three merchant statements and work out what you're actually paying to get paid. Worst case, you'll finally know."
The Reserve Bank is also lowering the caps on interchange fees, one part of what it costs to accept cards, from the same date, so your card costs may look different on your next statement.