Why Woolies slows down payment transactions – and you should quicken yours

Count to six. That's how long it takes for your payment to be processed when you tap-and-go at Woolworths and thousands of other retailers around the country.

It could be quicker, says former Woolworths’ Head of Payments, Cards & Financial Services Dhun Karai, but it proved too confusing for customers who have spent decades counting cash, scribbling signatures, bashing buttons and memorising pin codes.

“In our test labs people were uncomfortable that it was too quick,” the former board member of Eftpos Australia recalls.

“They kept taking a backwards step and asking 'Did it happen? I don't think it happened’.

“So we slightly slowed it down and found about six seconds was ideal. Using a chip on the other hand takes around 30 seconds – so that's still an 80 per cent saving in time.”

Benefits of quicker transactions

Karai left Woolworths in May after 12 years and is credited with designing and implementing the retail giant’s world-class customer payments infrastructure. She believes new and evolving payment transactions, such as payWave and PayPass, are as vital for small business as they are for national retail juggernauts.

“They are great for queue busting,” says Karai, who is now on the board of PMP Ltd.

“People hate the checkout. It actually kills the great shopping experience.”

Another major benefit is being able to reduce or redirect staff.

If you’re a retailer saving roughly 25 seconds per customer by using tap-and-go, and your business serves 30 customers an hour, you're freeing up staff for 12.5 minutes an hour. Over one day that’s 100 minutes. And over one working week that’s almost 8.5 hours.

“Contactless payments are absolutely a better customer experience and a significant cost saving,” Karai says.

“Managers can also focus labour more towards interacting with customers in the aisles, or communicating with them at the checkout.”

So what does the future hold?

For many small retailers, Karai foresees a not-too-distant future where the technology has become so advanced and accessible that most customers won’t even need to line up at a conventional checkout.

“We're seeing overseas an increase in mobile pin pads where staff come to you – wherever you are in the store,” she says.

“That goes to the heart of what retailers want: make your customers happy.”

One company that has mastered the art of coming to a customer and delivering exceptional service is Uber, Karai says. Their payment system – where there is no need to physically pay and receipts are automatically emailed – is a perfect example of what the future holds.

Instead of waving a card, payment systems like this will draw on information from mobile point of sale (mPOS), which relies on either a smartphone, a tablet, or even a reusable coffee cup, to perform the function of a cash register.

“Companies with the quickest transactions already have card details on file, just like Uber. And those new digital wallets are going to be big,” Karai adds.

Not only will these transactions speed up the customer experience, they'll also allow businesses to collect more marketing data from their customers using cloud databases, adds Karai.

Another example is Clipp, which allows people to pay with their phones at many restaurants and bars across the country.

“It's pretty frictionless compared to what we have right now – shopping will be a one-click experience,” says Karai.

One US payment company trying to make its mark on Australia is Square, which has a small credit card reader that connects into the headphone jack of a smartphone or tablet device and can be used as a tap-and-go device.

While progress is likely inevitable, Karai predicts Australia may end up adopting this kind of technology at a much slower rate than other countries purely because we're already a “global leading light”.

In fact, Australians are the biggest users of tap-and-go, with 60 to 70 per cent of Visa and MasterCard transactions now done this way.

“In other countries that have not gone contactless, digital wallets and watches are gaining traction because people still compare it to swiping, docking and signing,” Karai says.

“Whereas here, for up to $100 you can just tap-and-go – so you pretty much feel like you're already at the utopia of the checkout.”

What will drive the change?

Karai was also closely involved with the setting up of FinTech hub Stone & Chalk in Sydney, where she mentors innovative start-ups on loyalty platforms and card payments security and processing strategies. She also advises them on the complex and increasingly changing regulatory issues.

“The future is very exciting because FinTechs and technology players with much lower amounts of investment can really turn into big players,” she says.

The success of these nimble FinTechs will also ride upon a ‘wave of change’ in our demographic base, she adds.

“My advice to businesses would be not to underestimate the impact of changing demographics,” she says.

“When you have more than 50 per cent of the Australian population either Gen X or Y, you've got people comfortable with technology who will embrace electronics and electronic payments.”

Words by David Barbeler.

The articles represent the views of the authors and not necessarily that of the Bank. You should seek independent professional advice before acting on any matters set out in the articles.