Australian banks could soon lose their stranglehold on electronic retail payments as PAX plans to enter the Australian market by mid-2020. The entry by PAX is a big move because it will ship terminals which, apart from running on Android, natively accept payments from giants AliPay and WeChat, allowing local merchants to offer a seriously cheaper alternative to riding on Mastercard or Visa’s rails.
Asian shoppers and merchants largely eschew the US-based payments schemes because of their high costs of entry, rapacious interchange fees, painful currency conversion clips and associated high merchant charges by banks to acquire payments.
The Asian market, with considerable support from within China, has also sought to build out an alternative payments technology ecosystem that essentially leapfrogs 1980s and 1990s era electronic card payments and terminals with smartphones.
A big difference between Ali Pay and WeChat payments is that more often than not they will use a QR code or other transactional enabler that negates the need for proprietary chip technology.
The problem for Australian merchants and their banks is that a lot of their current terminals don’t offer native QR functionality locking them out of a rapidly growing market – which is why PAX has rocked up.
“The payments landscape is evolving quickly both internationally and in Australia, as our revolutionary terminal hardware design integrates more smartphone-like features, we expect demand to continue to grow for PAX’s innovative suite of terminal hardware and related software solutions.” - Jack Lu, Chief Executive of PAX Technology
Banks are also increasingly looking to offload or outsource their terminal fleets thanks to shrinking margins and competition, especially with open banking around the corner.
Institutions also face issues rolling out Android devices because they have for decades supported older proprietary technology that works for the bank, but is harder for merchants to integrate with their back-end software.
Android’s open source base fixes a lot of those problems, so terminals that can accept traditional card payments – including tap payments – as well as AliPay and WeChat are essentially a no-brainer for merchants with a high Asian customer base.
“This will pressure the banks to adopt Android, PAX is already in discussions with banks around reselling the device." - Nigel Lovell, Chief Executive of PAX Technology Australia