Merchant Centre

Top 8 Methods for Accepting Online Payments in New Zealand

 

There are numerous reasons why eCommerce continues to grow in popularity. New Zealand was, for a while, lagging behind the rest of the western world, but this is no longer the case.

In December 2014, there was a 12 per cent rise from the previous year in online spending in New Zealand. The most desirable online categories for online shoppers were, respectively, food and entertainment, books and newspapers, and computers & peripherals categories.

Entrepreneurs are taking notice of the Kiwis’ positive outlook on online shopping, and are rushing to meet this demand. One of the most important decisions you as an online retailer need to make is deciding on what payment options to offer your customers.

Tweet: Tweet: “New Zealand’s Top online payment systems” @POLi – Click to Tweet

 

This post will walk you through the three main areas to consider when choosing an online payment method for your business as well as the top 8 services in New Zealand.

Don’t leave this decision until the last minute

The biggest mistake many new business owners make is to put off making a decision about which online payment solution to use until the last minute. You need to think about this topic before your website is anywhere close to being launched as it can take a long time to get the facilities you need in place. 

Also, when it comes to accepting credit cards your bank may not be willing to give you a facility for online payments at all.

Two big things you need to consider

1. How will your customers want to pay for your products or services?

It’s important to think about the kind of people you wish to target. Consumers have different levels of comfort with shopping online particularly when it comes to paying for things.

Some people are accustomed to shopping online; they’re used to using a credit card to buy things. Others are happier to pay via bank transfer (a behaviour heavily influenced by being brought up on Trade Me).

Then of course there is the issue of accessibility to different payment methods (50% of New Zealanders don’t even own a credit card). So, to avoid missing out on a lot of potential custom, it’s very important to ensure you offer a range of payment methods that cover both credit and debit options.

People want to choose how they pay. The retailers who offer them this choice stand to win.

2. What overall options do you have?

Broadly speaking, your options include accepting credit card payments via a payment gateway, credit card payments via Paypal and payments direct from your customers’ bank accounts. It can feel like the options are endless - scheme credit and debit, direct bank transfer, gift cards, prepaid cards, offline Internet Banking, qcard, loyalty cards, Prezzy cards - but they can be categorised broadly as follows:

1.Credit Card

You will need a Merchant Account from a bank for online (card not present) transactions, and note that your bank may not be willing to give you this.  You’ll also need a relationship with a payment gateway provider  (see below) and your website will need to integrate with that provider.  
You can offer your customers a credit card option via Paypal but it’s expensive and your customers will need to be diverted to the Paypal environment.  Paypal tends to go hand in hand with eBay and therefore it’s not as popular in New Zealand as other parts of the world.

2. Bank transfer.

You could allow your customers to pay you via their Internet Banking by providing them with your bank details. The downside is, this approach is not very elegant, cart conversion will be terrible and the payment reference errors will drive you crazy.  
The two best options for New Zealand retailers are POLi and Account 2 Account. These systems both utlise the customer’s Internet Banking to enable them to make instant payments online.

3. Everything else. 

Outside of Bank transfers and credit cards, you could consider all the other card schemes – loyalty, prezzy, qcard etc. To be honest though, most NZ Retailers would consider these payment options to be pretty low down the list of priorities.

1. Credit Card & Payment Gateways

Credit Card Schemes –  there are a range of credit card schemes operating in New Zealand. The most commonly known are Visa, Mastercard, Diners and American Express.  
There are two fees that you should be aware of when considering offering credit card. Your bank will charge you a Merchant Service Fee (or MSF), typically a percentage of the transaction value – anywhere from 1 – 6%, (but likely to be around 4% for a startup business in a low risk business category), and your gateway will charge you a per transaction fee as well.

Payment Gateways – these connect all participants in a transaction together, i.e the merchant (you), the issuing bank (the bank that issued the card to your customer), the acquiring bank (your bank that issued you with a Merchant Account) and the credit card schemes.  

The common Payment Gateways in New Zealand are DPS Payment Express, Paystation, Flo2cash and IP Payments.  There are also new entrants such as Swipe that provide a complete service so you don’t need a separate relationship with a bank – i.e you get one fee per transaction that incorporates the MSF and gateway fee.  Confusing, I know!
The main New Zealand banks often have a branded Gateway offering e.g. BNZ Buyline or ANZ eGate.  Often the banks’ offering is simply while labelled from one of the Payment Gateway providers, meaning the bank uses their system but put their branding on it.

Flo2Cash

Flo2Cash provides credit card services to enable merchants in receiving their payments as easily as possible, whether it be over a landline phone, internet or your mobile phone. All transactions are processed in real time.  Like Swipe they’re able to offer a bundled service negating the need for a facility from a bank.

http://www.flo2cash.co.nz/creditCards.php

Paystation

Specialised  payment technologies development for eCommerce entrepreneurships as a Paymark Certified Solutions Provider, PayStation is there to help you find the right payment solution for you and your customers. They support internet credit card payment through the following banks: ANZ, ASB, Bank of New Zealand and Westpac. Paystation was recently purchased by Trade Me.

http://www.paystation.co.nz/cms_display.php

DPS – Payment Express

DPS is a well known credit card/payment gateway provider in New Zealand. It offers a range of services including merchant hosted and non-hosted options as well as a simple manual credit card processing facility.

https://www.paymentexpress.com

IP Payments

IP Payments offers a versatile service, and empowers you to handle any kind of payment. You can handle real-time transactions, batch payments, even recurring transactions. It is always good to give your customers the option to use their phone to complete payments and order products or services. Every third New Zealander owns a smartphone, and it would be purely illogical to ignore this market which is only going to get bigger.

http://www.ippayments.com/

SecurePayTech

SecurePayTech.com provides secure and affordable credit card authorization and processing services for on-line businesses. Comprehensive reporting of individual transactions combined with historical trend analysis keeps you firmly in control of your business.

http://www.securepaytech.com/

PayPal

The alternative way to offer your customers credit card payment options is via Paypal.

Many small startups go down this path first - particularly if they can’t get a Merchant Account from a bank or want a low cost entry into the market.  Although, it is pretty easy to get started on Paypal, the transaction fees are high which can eat into your profit margins pretty quickly

https://www.paypal.com/nz/

2. Direct Bank Transfer


POLipay

POLiPay has been allowing customers with New Zealand bank accounts to make purchases and pay without using a credit card since 2007. It offers a seamless experience delivered via the customer’s Online Banking. Simply log-in to your bank account and confirm the payment. POLiPay is extremely secure and simple to use, and above else, allows people to shop through a familiar platform - their Online Banking account. This is an attractive selling point for online shoppers and could well increase your online sales with fewer transactions dropped during checkout.

Ease of use and familiarity are great allies of eCommerce since there is still a bit of caution coming from New Zealanders when it comes to online shopping. Letting them operate from a familiar territory helps bridge this trust gap significantly.

http://www.polipay.co.nz/

DPS Payment Express Account to Account

Payment Express Account2Account offers a similar service to POLipay but has only been in the market since 2014 and therefore this service and brand hasn’t been exposed to as many consumers as POLi. Payment Express charge’s monthly fees so take this into consideration if you’re not going to use them as your credit card payment gateway.

http://www.paymentexpress.co.nz/Products/Ecommerce/Account2Account

Choose an online payment solution wisely

There is a lot to consider when it comes to choosing the perfect online payment method for your online business. Depending on which segment of the market you want to target, your long-term business plans, the state of your finances as well as your functionality preferences, what is ‘ideal’ may vary.

All of the above mentioned solutions are reliable and tested, but it is up to you to make the final call when it comes to picking the one that works for you. Finding that ideal fit when it comes to payment methods is something you can’t get any other way.

We hope this list helped you make the right decision.

What are your thoughts on the best online payment methods in New Zealand? Let me know in the comments below!

Until next time!

Jeff Skidmore
Director, POLi

How much do online payment systems cost?

 
 

Note – obviously, we have a vested interest in POLi (it’s our service) but we have tried to make this post impartial
 
 Tweet: “Using the right online payment system could save you money” @POLi – Click to Tweet

For a small country, New Zealand still represents a huge potential market in the world of e-commerce. Between 2001 and 2010 the uptake of online shopping by New Zealanders grew from 21% to 57% of the population. By 2011 63% of the population had purchased something online, amounting to approximately NZD $2.68 billion in sales.

As merchants of all shapes and sizes continue to embrace the online market place, utilising ecommerce store development solutions such as Shopify, Magento, Opencart and more it’s essential that Merchants offer their customers a range of convenient and secure  online payment options.

However, payment systems do have a cost associated so it is very important that merchants evaluate their options carefully.

This post will compare the fees for Paypal, POLi and Account2Account.
 

What are the options?

Broadly speaking, your options include accepting:

1. credit card payments via a bank;
2. credit card payments via a payment gateway;
3. credit card payments via Paypal;
4. debit payments direct from your customers’ bank accounts.

Note that when we say credit card we include scheme debit (i.e Visa Debit). For a full breakdown of the online payment options available in New Zealand, read this blog post.

Currently there are over 1million people in New Zealand who do not have a credit card, which immediately excludes them from using any payment system that requires one. Also, either through preference or circumstance many people with a credit card will use a debit option if given the choice.

However, there are also as many people who do have a credit card and, with the success of the many rewards programs out there, want to use it.

The upshot is, that if merchants want to entice customers to part with their dollars, they must provide a range of payment options. And understanding the costs associated with each option is critical.

Comparing the options


Debit Options

Poli payments

POLi allows you as a merchant to offer your customers an alternative payment option to credit cards. With POLi, your customer can pay online directly from their bank account via Internet Banking using a secure process.

POLi also has lowest fees of all the options presented in this article.

Account 2 Account

Payment Express Account2Account offers a similar service to POLipay but has only been in the market since 2014 and therefore this service and brand hasn’t been exposed to as many consumers as POLi.
 
Payment Express charge’s monthly fees so take this into consideration if you’re not going to use them as your credit card payment gateway.

Credit Options

PayPal

PayPal is extremely well known, but the uptake in New Zealand has been lower than in other countries (perhaps due to its tie with eBay which is not available on these shores).

The system allows customers to pay securely for items using a credit card without having to provide any bank or card details to the merchant. The merchant can choose to have a fully integrated system (transaction takes place within their ecommerce site) or divert the customer to PayPal’s site to complete the sale.

PayPal is often seen as being an easy entry to market for small businesses and startups but transaction fees are particularly high.

Credit Card Schemes –  there is a range of credit card schemes operating in New Zealand. The schemes most commonly known are Visa, Mastercard, Diners and American Express. Part of the contract which allows you to receive payment via a credit card scheme, is a Merchant Service Fee (or MSF) typically a percentage of the transaction value – anywhere from 1 – 6%, (but likely to be around 4% for a startup business in a low risk business category).

Credit Card via a bank

Traditionally, to offer credit card payments you need a facility called a Merchant Account with your bank and a relationship with a payment gateway (see below). The bank will charge you a Merchant Service Fee and the gateway will typically charge you a flat fee per transaction.

Some banks can offer you a bundled service that includes the payment gateway service.

Credit Card via Payment Gateway

Payment Gateways – these connect all participants in a transaction together, i.e the merchant (you) the issuing bank (the bank that issued the card to your customer) the acquiring bank (your bank that issued you with a Merchant Account) and the credit card schemes.
 
The common Payment Gateways in New Zealand are DPS Payment Express, Paystation, Flo2cash and IP Payments.

(The main New Zealand banks often have a branded Gateway offering e.g. BNZ Buyline or ANZ eGate.  Often the banks’ offering is simply while labelled from one of the Payment Gateway providers, meaning the bank uses their system but put their branding on it.)

For a list of the main payment gateways in New Zealand, check out our forthcoming post.

Two gateway companies in New Zealand offer a bundled service that means you don’t need a Merchant Account with a bank in order to process credit card transactions. They are Flo2cash and SwipeHQ. The fees are quite high, but it can be a good option if you can’t get a merchant facility from your bank. 

What is the difference in fees?

 

 

Fees

 

Set up

Transaction Fee or MSF

Payment Gateway (per tx)

Monthly Service Fees

PayPal

(full solution*)

$0

3.4% + $0.45 (USD ?)

Included

$0

Credit Cards

Varies

4% - 6%

$0.15 - $0.25

$25 - $60

POLi

$0

1% (capped at $3)

Included

$0

Account2
Account

$150

1.2% (capped at $3)

Included

$25 - $60 **

Flo2cash

$150

2.75%***

Included

$30

SwipeHQ

$99

2.75%***

Included

$0

* This illustration is for PayPal’s fully hosted solution.
** Not charged separately if also processing credit card transactions
*** Visa and MasterCard

Note - Figures shown do not include any applicable GST.

Case study illustration

Case Study: start up store, $10k sales per year, 10 transactions per month, av. sale price of $80.

John has recently set up a small start up NZ niche online store and he is now looking for an online payment system. To date, he has been selling his products via Trade Me and he knows many of his customers do not have a credit card.

Therefore, he wants the flexibility to offer his customers both credit card and direct bank transfer payment methods.

Let’s assume half of his sales transactions are completed with a credit card and half via direct transfer of funds.

Using the PayPal service, he will spend $202 on transaction fees, but this includes the fees he would otherwise have had to pay for the Credit Card Scheme Merchant Service Fees (MSF) and payment gateway fees.

If he also uses POLi he will pay an additional $50 in transaction fees but there is no set up fee. So, a total of $252 in the first year.

If he opts instead to use Account2Account, he will pay an additional $150 for set up and $60 in transaction fees. So, a total of $412 for the year.

Do the maths before your commit to an online payment solution

Merchants will have different online payment needs at different stages of their store’s life. Before you jump into bed with a particular solution provider, think about your business growth plans. In the example above, although a little simplistic, shows that the POLi + PayPal option would cost John 2.52% of total revenue in the first year. This is compared to 4.12% using A2A + PayPal.

A 1.6% difference might not sound like a lot but if John were to triple his revenue by year three, he would be paying nearly $500 a year more.

It’s worth thinking about.

What do you think? We would love to hear from you with any questions or comments about your own experiences with online payment systems.

Until next time.

Jeff Skidmore

Director, POLi

What does Apple Pay mean for Kiwi Retailers?



If you have been reading the news lately, you may well have heard of the latest initiative from Apple - Apple Pay. But what is it exactly and what does it mean for Kiwi retailers? 

Well, Apple advertises the service as a means of using “..your iPhone, Apple Watch, or iPad to pay in a simple, secure, and private way.” 

It is, in fact, an evolution of ‘near field communication’ (NFC) which allows you to use your iPhone 6 or Apple Watch to make contactless payments in stores or use when shopping online (for which you can also use iPad Air2 and iPad Mini 3). You simply load your credit card details onto your devices via Passbook and then use your device to complete transactions securely and anonymously.

So what does this mean for Kiwi Shoppers?


So far so good. So, the question is, are New Zealanders going to be making all their payments with their smart phones in the near future? And, as a shop owner, do you need to do anything differently?

Whilst there are no official sales statistics for the iPhone 6 in New Zealand, Apple had publicly stated that they had over 4 million pre-orders of the new handset worldwide - a new record. 

So, on the assumption that a number of New Zealanders got on the waiting list, braved the queues and are now proud owners of the iPhone 6 and 6 Plus, the question remains, will they use Apple Pay? 

Well, Apple fanatics tend to be just that - fanatical about Apple and all its products. So, on the surface, the answer would be a resounding ‘yes!’. But, the difference with Apple Pay is that is clearly moving into the territory of online payments a place where Kiwis have historically tended to be a little cautious and, you could argue, a touch behind the curve in comparison to the US.

And it goes further than that. Apple Pay is very USA-centric (at the moment, I hasten to add) which poses four major barriers for adoption in NZ.

The first obvious barrier is ownership of a suitable Apple Device. Currently, the only devices that Apple Pay works on are the iPhone 6, iPhone 6 Plus, iPad Air 2, iPad Mini 3 and the Apple Watch.

Even if they own a suitable Apple device, approximately half of Kiwi adults do not own a credit card so for these people Apple Pay will offer little in the way of actionable use.

Whilst Apple Pay is compatible with Debit Cards, the Banks that are currently supporting the system are USA only. 

The physical stores that support Apple Pay are also conspicuous by their absence in the NZ market (with some exceptions e.g. McDonalds). So even if you want to use the app in a shop, well, you can’t (yet).

What you can do as an NZ e-Retailer


Whether Apple Pay takes off over here or not, online shopping is certainly on the rise, as is the use of mobile phones for browsing the Net

With more and more Kiwis choosing to shop online, you simply can’t ignore the importance of offering them different payment options at checkout.

For those customers who choose to pay with a credit card, you probably don’t need to do anything more than offer them the ability to do so using a reputable quality credit card payment gateway. But ignore those customers who don’t have a credit card (or don’t want to use one) at your peril! 

By far the best approach is to provide a non-credit card alternative payment solution such as POLipay as it allows customers to complete their transaction using their bank account on their preferred device.

Get POLi fully implemented on your website for just $300!


Short on time? We’ll implement POLi on your website for just $300 – the perfect option if you don’t have time to do it yourself. We’ll need to ask you a couple of questions to make sure you qualify but after that you’re good as gold.

Click here to request a call back and get the ball rolling. 

Start using today POLi FREE for 3 months*


Join hundreds of other New Zealand businesses that have accessed POLi via a shopping cart plugin or one of our eCommerce partner platforms and sign up for POLi before the Christmas rush.

Click here to request a call back and get the ball rolling. 

The POLi team

Great news for TSB customers using POLi

TSB Removes $0.25 fee for online payments

Until recently TSB customers paid a $0.25 fee per transaction when making Internet Banking payments.  This was out of step with the rest of the banking industry which typically includes these transactions for free and just charge a monthly activity fee.  

Well, now TSB has dropped the 25 cent fee. So great news for TSB customers who can now use POLi for free just like everyone else.  

For more details see - http://us5.campaign-archive1.com/?u=c68bd894e649b496ae956976c&id=ba450e0289&e=9e4d31ed1d