A mobile payments platform being designed by Paymark and the three mobile telcos is expected to go live later this year.
The trusted service manager (TSM) will use near-field communications (NFC) to enable the secure transfer of information stored on the customer's phone to a retailer's EFTPOS terminal. The TSM is a joint venture involving Paymark, Vodafone, Telecom and 2degrees.
Head of Paymark Philip Deason says the platform is on track to be in the market by the end of 2013.
"We've put a stake in the ground, we're going to build it quickly, get it going, but we are attempting to make it flexible enough so that if something comes along we can work with it," Deason says.
The TSM will become a separate entity with its own board and CEO, and be staffed by around 10-12 people. It is intended to be "the path of least resistance" for retailers, loyalty organisations and other NFC providers such as Snapper to "get securely on the customer's phone," Deason says.
The TSM will charge to provision the application and "to maintain the lifecycle," Deason says. It won't 'clip the ticket' on every transaction.
During a panel discussion at the Mobile Payments and NFC Forum in Auckland yesterday, Deason said that the New Zealand market is so small that all players are forced to work together. However he did not rule out the arrival of "cloud providers" and says the TSM is being designed to accommodate and/or compete with over the top players such as Google and Apple.
"You've really got to build that flexibility into the business model and your planning to deal with disruptions that we are sure are going to come along."
MasterCard country manager Albert Naffah compared the TSM's strategy to Trademe's early presence in New Zealand.
"Trademe got critical mass before eBay even realised NZ was on the map and as a result [eBay] were kept out of the market," he says. "The same thing needs to be done here with payments, the likes of Google will look at New Zealand but there is a whole list of markets before NZ and its important that in the interium that the local players get a solution."
Despite the best intentions of the banks and telcos to push customers into electronic transactions, it appears New Zealanders are wedded to cash.
Payments NZ CEO Steve Nichols says there is $4 billion in cash currently circulating in the New Zealand economy. Even cheques are still quite common - around 50 million cheques processed are each year. This compares to half a billion cheques processed in 1995.
BNZ strategy principal Russell Briant says cheques are still useful for multiple signatories and the "incidental tradesman".
New Zealand Retailers Association CEO John Albertson reminded delegates that the payment's part of a transaction was usually the smallest part. He says the retail sector in New Zealand is worth $70 billion, but the sector has suffered following the Global Financial Crisis of 2008 with average retail margins cut in half from six percent to just three percent since then.
Albertson says that smartphone technology is changing the retail experience, turning shoppers into pre-purchase experts (they can instantly research the product -- including its price and availability elsewhere) and become post-purchase commentators (for example tweeting a good or bad experience).