The Commonwealth Bank is targeting small businesses for its new transactions service, that allows merchants to accept payments from mobile devices, but an industry expert says start-ups should do their homework before signing up for the service.
CBA’s new service lets merchants accept payments from iPhones and iPads in addition to devices running Google’s Android operating system.
According to the bank, about 1,000 small businesses are already using the service, which is an extension of its eVolve eCommerce platform.
In addition to accepting mobile and online payments, eVolve also offers website creation tools and hosting services through a series of do-it-yourself templates.
The building and certification of websites can be a big overhead for small businesses that accept online payments because they are required by credit card schemes to conform with strict security standards.
Retail banks have increasingly turned to eCommerce hosting as way to lure new customers and reduce credit card fraud.
The new service will cost $55 a month for businesses who bank with CBA, and $65 for those using other banks.
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CBA will also release business activity data and records to clients on request, a move aimed at quelling fears that fast-growing firms will be restricted by CBA’s infrastructure.
Apart from hosting, the eCommerce platform provides basic business application functionality such as running activity reports, setting prices and updating inventory.
Telsyte research director Foad Fadaghi says merchants need to determine how much it will cost them to use such a service, on top of the fee set by CBA.
“It has to be priced at a level that makes sense for the merchants to take up these services. That’s where other services have failed in the past – it essentially has to be a good deal,” Fadaghi says.
“The other thing to consider is if they need to retrain staff around the payment solutions. If you have a small shop or something like that, does it require a lot of additional training?”
Fadaghi believes businesses with high levels of store traffic stand to benefit the most from this kind of technology.
“High volume transactional-type businesses, where you’ve got a lot of people coming through, [will benefit more] – it might provide some speed enhancement over current methods,” he says.
He says while the service represents new opportunities for merchants, small businesses will always gravitate towards cost-effective measures.
“Small businesses have pressure on their margins and are more interested in making money than having lots and lots of different payment systems available,” he says.
“There might be some small usage scenarios that will see it benefit but it comes down to the bottom line.”
CBA has indicated it will steer clear of the taxi industry, with regard to its mobile payments service, due to ongoing concerns over payment card security.
“We’ve never been that [keen] on taxis… [They have] the highest rate of fraud,” a CBA spokesperson says.