SMEs not ready for PIN payment switch

Most Australian SMEs are not prepared for the switch to chip and PIN based card payments according to new research commissioned by PayPal Australia.

From August 1, chip and PIN based technology will be required across all payment terminals in Australia, sweeping away signature verification based card payments.

The study of 534 Australian SME owners conducted by Lonergan Research found that over half of those surveyed (54 per cent) did not currently accept chip and PIN based payments. More worryingly, it found that 64 per cent did not even understand what chip and PIN technology actually was.

Further, while credit card payments are the second most common form of payment method, 36 per cent of SMEs who accept credit card payments do not currently accept chip and PIN based payments.

The shift is thought to have more of an impact on restaurants and cafes where people generally do not line up at terminals to make their purchases. Australian Retailers’ Association executive director Russell Zimmerman said he thought the transition would be minimal in his sector.

“In a retail store you bring your customer up to the till to make a payment,” he told Dynamic Business. “So I think the retail industry is very ready…. I still believe that for the restaurant industry, they’ve had plenty of time and warning to do something about it.”

The move away from signature verified card payments has opened up new opportunities for start-ups and online payment providers to swoop into an emerging market.

PayPal has launched a new smartphone application dubbed ‘PayPal Here’ allowing customers to pay directly via an app on their mobile phones. It will also enable a business to turn their smartphones into an effective point of sale (POS) provider via a Bluetooth connection to a specialised PIN card reader. Receipts can be e-mailed or sent via text to customers.

“PayPal Here has been designed to ensure Aussie businesses of every size are prepared for the new chip and PIN mandate in August and are equipped to capture every sale, regardless of the payment method,” Andrew Rechtman, Senior Director of SMB, Retail and Strategy at PayPal Australia commented.

According to the Lonergan Research survey, only one in ten businesses currently own a device allowing them to accept card payments made from smartphone apps.

One start-up hoping to capitalise on the end of signature-based payments is Clipp, a smartphone app allowing people to pay their bar tab or restaurant bill over their phones.

The app was launched in Perth on Wednesday June 25, with all venues in Western Australia able to sign up. Clipp CEO, Greg Taylor, said the WA launch was the start-up’s first “major foray” outside NSW and Victoria.

“We realised that going out to a bar had become more about waiting at the bar to be served than actually enjoying the tipple and the social experience, so we decided to change that,” he said.

“A customer simply opens the tab on the app which is integrated directly with the venue’s POS. They then receive real-time updates on their tab, can share the tab with a group of friends and when they’re ready to call it a night, they simply close the tab on their phone and leave the venue.”

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