Australian start-ups are suffering huge costs due to a lack of efficient payment systems, according to the former CEO of an electronic payment solutions provider.
Grant Halverson, who now heads Mclean Roche Consulting Group, says Australian businesses should discourage cash and cheques and consider new payment types such as mobile, peer-to-peer and virtual.
“Currently, more than 50% of all payment value in 2010 is still by cash and cheques. These are the most expensive [and] least secure,” Halverson says.
Halverson says new forms of payment will encourage innovators and increase competition.
“Business needs to be up-to-date in a technology sense. If you’re going to conduct business over Facebook, what payment vehicles are you going to use?” he says.
“If you’re going to use Visa and Mastercard, they are expensive. Why can’t you use a local EFTPOS product. It doesn’t have a chip in it so you can’t use it across the net.”
“The other issue is obviously broader reach from new forms of technology – things like [the National Broadbank Network]… You can’t use a cheque on the NBN and you can’t use cash.”
Halverson says Australia needs to catch up with other developed countries, such as Japan and Sweden, which have eliminated cheques and have reduced cash usage to below 15%.
Earlier this year, the Reserve Bank of Australia released a discussion paper on the future of the Australian Payments System, but Halverson says more needs to be done for the sake of businesses.
“The change process has taken far too long… I’ve worked with four major [prospective business] entrants and they’ve all decided not to come to Australia because of the uncertainty around [payment] regulation,” he says.
“The regulators need to wake up to this… They’ve been far too slow, in my view, in making the reforms.”