Tyro’s untapped potential 

Tyro has taken the lead and launched Australia’s first Tap & Save least-cost routing debit payment system to help small to medium enterprises save.

As Australians move closer towards a cashless society, small businesses are more likely to witness Australians wave a little plastic card, watch, or wristband around a small terminal to pay for their morning coffee or smashed avocado.

In most cases, customers don’t even have to sign their autograph. They simply ‘tap out’ and move on with their day. It’s been a popular payment method not only in hospitality and retail businesses, but also to pay for transport services such as Sydney’s Opal and ferry services. The cashless movement is taking over.

The Reserve Bank of Australia’s fourth triennial Consumer Payments Survey revealed that over a three-year period to November 2016, contactless card payments had escalated three and a half times to represent two-thirds of all in-person card payments.

According to eftpos Australia, the company that runs the payment system, debit cards represent 67 per cent of all card transactions in Australia, or 5.6 billion transactions a year. Of that, 74 per cent of all debit cards, or 26 million, are multi-network debit (MND) cards, featuring both eftpos Australia and international schemes.

But what most consumers and businesses fail to recognise of convenient and flexible tap-and-go payment methods, are the hidden costs attached.

Currently in Australia, almost all tap-and-go card payments, as opposed to ‘swipe and pin’, revert to international credit card networks owned by Visa or Mastercard, instead of the domestic eftpos Australia network. While the outcome is the same for the cardholder, the credit card schemes typically charge the merchant more than eftpos.

As of September 2017, the RBA reported that when a payment goes through a credit card network, the average total merchant fee for a debit contactless transaction was 0.26 per cent with eftpos Australia, and 0.58 per cent with the international credit card schemes.

In 2017, $242 billion of non-cash payments were made each business day, resulting in a collection of hundreds of millions of dollars of “unavoidable” merchant fees.

“There are so many hidden costs and lots of confused small businesses who are oblivious to what’s really happening,” says Nathan Cause, Tyro Head of Sales.

“When merchants set up an electronic funds transfer at point of sale (EFTPOS) they think of terminal rental fees, but not about the fees that stem as a result of the seamlessly convenient tap-and-go cashless method of payment.”

The House of Representatives Standing Committee on Economics issued a deadline of 1 April 2018 for banks to address merchants’ demand for a lower cost tap-and-go model.

Beating other banks to the party, business bank Tyro was the first to launch a product to allow merchants to access a lower fee for tap-and-go payments.

Tyro’s new Tap & Save feature is its own version of least-cost routing or merchant routing, where eligible debit card contactless tap-and-go transactions are processed through the cheaper eftpos Australia network to provide merchants with a lower acquiring cost.

Tyro is pricing eligible Tap & Save transactions the same as eftpos transactions to bring the best value to Australian businesses.

“This new feature could save Australian small and medium-sized enterprises (SMEs) money. When customers tap, you save, and what business doesn’t want that?” Nathan says. “Tyro is committed to delivering value to its customers, helping grow their businesses, and relieving some of the expense and pressure of doing business. Tyro’s goal is to give café owners one less thing to worry about, and we believe the Tap & Save EFTPOS feature can do that.”

Nathan says it’s only a matter of time before other banks follow suit, but Tyro is proud to be the first to offer a solution in response to the banking needs of SMEs, and a push from the House of Representatives Standing Committee on Economics.

“Technology is constantly evolving, so we needed to catch up and put the necessary technology in place for our systems,” Nathan says.

Least-cost routing will afford Australian businesses the choice to automatically process MND contactless transactions to the least-cost payment network. Tyro’s Tap & Save has the potential to generate substantial savings on acceptance costs for eligible scheme debit tap-and-go payments for businesses using Tyro terminals.

“As an average, cafés using Tyro terminals could save up to 7 per cent on their merchant service fees (MSF). Bars using Tyro could save as much as 12.1 per cent on their MSF with Tap & Save,” says Nelson Cox, Tyro Sales Team Lead.

“This solution will be huge for small businesses, especially when you account for the fact that cafés usually have smaller transaction values, and the increasing rate of cashless payments.”

Savings will vary between merchants depending on a business’ card mix, transaction volume and amount, industry and pricing plan, but Nelson says the bottom line is that businesses have the potential to save, and not just in fees.

“Users of the Tap & Save feature won’t receive any additional costs for activation, and there’s zero disruption to your business. It’s seamless and stress free,” Nelson says.

What’s more, users can still have their settlement funds re-directed to an existing bank provider.

“Tyro is all about removing the friction from banking for SMEs, and not adding to the complexities of running a business,” Nelson says.

At the time of print, 3000 merchants had already activated Tyro’s Tap & Save.

Owner of The Oaks, Andrew Thomas, says Tap & Save has helped him save $1600 each month without changing any of his operations.

“[There’s] no fiddling with machines, no increase in prices, no staff retraining – keeping my customers and my team happy,” he says. “Tyro understands what’s important to me, and they make it happen – simple.”

Natalie Brennan, General Manager of Muffin Break, also trialled Tyro EFTPOS before recommending it to other franchisees.

“Tyro has really helped with the speed of service,” Natalie says. “Because the EFTPOS is integrated into the point of sale, it’s a much faster transaction. It also means that customer service isn’t double handling, leading to fewer errors. Most importantly, when the transaction is taken care in a faster and efficient way, [you] can then focus on the relationship with the customer, rather than the transaction.”

Tyro is a business bank with customer service at the core. The company started in 2003 and became the first Australian technology company to be granted a banking licence in 2015. More than 22,000 businesses now use Tyro’s systems.

Tyro’s mission is to use technology to empower Australian SMEs to create their own version of success, Nelson says consumers that partner with Tyro don’t just experience a transaction, they join a banking community committed to growth.

“We understand that not all businesses are the same and we analyse each business individually that approaches Tyro,” Nelson says. “We offer no lock-in contracts because we really believe in our products and services. Rather than focus on making a profit, we focus on tailoring pricing and product features to the needs of the merchants – to help save them time and money.”

To see if Tap & Save is appropriate for your business, and terms and conditions, call Tyro on 02 8907 1700 or visit tyro.com

This article appears in the June 2018 edition of BeanScene magazine. Subscribe now.