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A new survey by the Reserve Bank of Australia (RBA) has found that consumers are still unsure what eftpos is, despite most of them using eftpos debit cards.
This week, the RBA published analysis of its 2022 Consumer Payments Survey, based on a sample group of 999 Australian consumers.
Conducted between October and December 2022, the survey participants recorded 11,000 payments, 400 cash withdrawals and 1,900 automatic payments in their seven-day diary periods.
Although some of the survey’s findings were to be expected — a decline in cash and a rise in mobile payments, for example — some of the findings were more surprising.
The survey contained two sets of questions on dual-network debit cards (DNDCs): one that was asked in the pre-diary stage; and others that were asked in the post-diary stage.
The phrase “dual-network debit card” was not used, however, as the RBA judged that respondents may not be familiar with the terminology (even though they had volunteered to take part in the survey).
In Australia, 85 percent of debit cards are DNDCs, which means consumers can make payments via eftpos (where available) or via an international scheme. The remaining 15 percent of debit cards are single network.
eftpos is a low-cost domestic network that offers an alternative to Visa Debit and Debit Mastercard, and helps to put downward pressure on fees throughout the market, the RBA said.
Lack of consumer awareness
In the pre-diary research, participants were asked: "Off the top of your head do you know if you have an ATM/debit card that can process payments through more than one network? (e.g. eftpos, Mastercard, Visa, Unionpay)"
The question also included an instruction: "Please do not check your ATM/debit cards when answering this question."
To this question, about 40 percent of respondents answered “yes”, 40 percent answered “unsure” and 20 percent answered “no”.
In the post-diary research, the participants were asked a follow-up question: "Please check the ATM/debit cards that you own."
"Do you have an ATM/debit card that has both the logo of one of the international networks on the front (e.g. Mastercard, Visa, Unionpay) and has the eftpos logo on the back?"
To this question, the responses aligned almost perfectly with DNDCs current share of Australia’s debit card market.
About 85 percent of respondents said “yes” and about 15 percent said “no”.
In other words, after checking their cards, more than three-quarters of respondents who initially said they did not have a DNDC realised they actually did have a DNDC.
This means that, in total, more than 55 percent of consumers were either initially unsure or incorrect about whether they had a DNDC.
The RBA said the results highlight the “lack of general consumer knowledge of DNDCs” among consumers.
“This could partly reflect the rise of contactless payments, where DNDC payments are routed without consumers making an active choice, resulting in less consumer engagement with their options,” the bank said.
“Consumer awareness of the second network on DNDCs may also be inhibited by the front of the card typically just showing the international network’s logo, with the eftpos logo displayed on the back of the card.”
Are the savings important to consumers?
Another finding of the RBA survey is that the vast majority of consumers who use DNDCs do not care much for the savings they can offer.
In the post-diary research, participants were asked the following: "Thinking about your ATM/debit card(s) that has more than one network, does it matter to you which network on your card(s) processes your transactions?"
To this question, 80 percent of respondents answered “no” and 20 percent answered “yes”. Moreover, among the 20 percent that had a preference, there was only a few percentage points’ difference between eftpos, Visa and Mastercard (in that order).
However, as noted by the RBA, if Visa and Mastercard were to be combined into a single group — the international schemes — they would be more preferred among respondents than eftpos.
When asked what factors influence their preferred network, the most common answer was safety and security of the transaction (59 percent), followed by surcharges (46 percent) and merchant acceptance (42 percent).
“Overall, these results suggest that consumers have low awareness of DNDCs, and showed that only a small share of consumers cared which network processed their debit transactions,” said the RBA.
eftpos usage grows
Although consumer understanding of DNDCs may be lacking, eftpos is gaining market share in certain debit transactions.
In July 2022, eftpos launched a long-awaited online payment processing solution, allowing it to compete for card-not-present transactions as well as card-present transactions.
By November 2023, as confirmed by eftpos operator Australian Payments Plus (AP+), eftpos was processing more than 25 percent of card-not-present debit transactions in Australia.
This amounts to $A30bn in revenue to eftpos — revenue that has been gained from Visa Debit and Debit Mastercard.
In response, as covered by Vixio, Visa slashed its interchange fees for certain small business transactions by 90 percent, hoping to win back territory.
Brad Kelly, managing director of Australia’s Payment Services consultancy, said that eftpos’ growing market share can be partly attributed to flat-fee acquirers.
Square, for example, charges merchants 1.9 percent per transaction on all payment types, so it has an incentive to route “as many transactions as possible” via eftpos, he said.
As eftpos charges only 0.28 percent per transaction, the spread between the two charges offers a significant revenue source for the acquirer.
But despite eftpos’ strong performance over the last 18 months, there is likely to be a low ceiling to its share of transactions.
As noted by Grant Halverson, CEO of consultancy McLean Roche, Australian banks generate significantly more revenue from Visa and Mastercard debit fees than from eftpos fees, and the "Big Four" banks are still the largest acquirers.
They therefore have little incentive to promote eftpos over Visa and Mastercard, aside from RBA encouragements to do so.
