Chemist Warehouse is jumping on a new payment trend as a major push continues to outlaw nasty surcharges. These charges to pay with debit and credit cards have been chipping away at Aussies’ wallets for more than two decades but Labor has recently announced a plan to ban them altogether.
The discount chemist, popular with Australians trying to save money in a cost-of-living crisis, wants to offer customers a new way to pay before the 2026 surcharge change. QR code payment systems have cut out the middleman (banks and card service providers) and allowed people to pay businesses directly.
Dipra Ray recently launched the Pyng app in Australia and he told Yahoo Finance his QR code payment system could save people hundreds or even thousands of dollars a year. But for the really big retailers who don’t pass surcharges onto consumers, like Chemist Warehouse, the savings could be in the millions.
RELATED
The discount pharmacy brand pays a whopping $15 million in fees to provide digital payments every year and it’s looking to cut down that massive cost.
It will be installing QR codes for customers to scan at the checkout, which will allow them to pay for their items like a bank transfer rather than a regular payment. The move won’t save shoppers any money and they will still be able to pay with their phone, watch, card and with cash.
“Because we are a discounter, and work on low margins, these transaction costs represent a big part of our potential profit,” Jack Gance, the company’s chairman, told The Australian Financial Review.
“So, from our point of view, it is important we have a competitive, low-cost payment system. That means we can provide a better service, and a better price to the consumer.”
The QR codes will start popping up in-store and online from early next year.
RMIT finance expert Dr My Nguyen believes this is a “significant” move that could see others follow suit.
“For retailers like Chemist Warehouse, they can substantially reduce transaction fees, which can be as high as 1.5 per cent for card payments,” he explained.
“These savings can potentially be passed onto consumers in the form of lower prices. QR codes can streamline the payment process, allowing for quick and easy transactions without the need for physical cards or additional hardware.
“The encryption of payment information within QR codes also enhances security, reducing the risk of fraud compared to card payments.
“As more businesses recognise these benefits, we can expect wider adoption of QR code payments in the retail sector.”
QR codes becoming the way of the future for payments
Chemist Warehouse will be using codes created by online payment service Waave and it’s part of a movement called Pay by Bank.
Waave said Pay by Bank minimises fraud, is more secure for customers, and avoids having to pay companies like Visa and Mastercard, with merchant fees being up to 80 per cent lower under this new model.
Ray told Yahoo Finance that Australia is slowly jumping on this global trend.
“If we look at India, Southeast Asia and Brazil… there are lots of countries in the world where this has been emulated,” Ray explained to Yahoo Finance.
“It makes absolutely no sense when you use your own money to pay that you suddenly lose 1.5 per cent [in surcharging]. It’s, frankly speaking, quite ridiculous.”
An analysis of Reserve Bank of Australia (RBA) data by the ABC discovered card surcharges were costing Australians close to $960.26 million a year.
Canstar also recently found that merchant service fees just for credit cards amounted to a whopping $4 billion in 2023. That’s not including the fees attached for debit or EFTPOS transactions.
But will Aussies jump on the bandwagon?
The QR code payment technology has been adopted by some big players like India and China, where it’s ubiquitous.
Tech-savvy Aussies will no doubt jump straight on the bandwagon, especially if it saves them money from time to time, but it seems like not everyone is drinking the Kool-Aid.
The codes have become very popular in hospitality venues as a way of ordering without the need of a waiter. But a poll of more than 4,300 Yahoo Finance readers found 91 per cent prefer to order their food or drinks through a human rather than through their phone.
Some diehard cash users have spoken out about their staunch opposition to technology like this.
“Never have I, never will I use QR codes. The easiest way to scam someone,” wrote one person.
“Happy to use cash, no way would I ever download a QR code,” added another.
“Sounds good in theory, and as I am aware that anything that sounds good and maybe trialling the outcome, actually turns out to be still controlling people,” said a third.
It’s true that QR codes are being surreptitiously used to con people all over the world. Scammers are pasting their own codes over legitimate ones in public places like car parks and the phenomenon has been seen here in Australia over the last few years.
If businesses across Australia start applying QR codes as forms of payment, you’ll have to be extra vigilant that the code you’re scanning hasn’t been compromised.
Major push to get rid of surcharges
There have been some major Aussie proponents of getting rid of card surcharges.
Sydney MP Jerome Laxale has been campaigning for months to convince the banking sector and the Reserve Bank (RBA) to abandon the annoying charges.
While some of the bosses of the big four banks have agreed that surcharging isn’t fit for purpose in 2024, the push to outlaw them received its biggest boost earlier this week.
The federal government said it was prepared to ban debit payment surcharges by 2026, pending a review carried out by the Reserve Bank.
The consumer watchdog has also been given $2.1 million to investigate fees for card purchases, which can increase the total cost of goods by several per cent.
Prime Minister Anthony Albanese said while the surcharges may not seem like much by themselves, the fees added up.
“There shouldn’t be hidden charges and surcharges there when people are using their own money,” he said in Brisbane on Tuesday.
“A debit card is taking money directly from people’s accounts.
“It is their money and there shouldn’t be surcharges on it.”
But Australian Restaurant and Cafe Association CEO Wes Lambert said removing surcharges altogether could lead to higher costs for consumers in the long run.
For instance, the banks and payment companies could impose a higher flat rate cost on businesses.
“It would lead to higher surcharges and fixed fees that businesses would have to pass on to customers,” he told AAP.
“While we fully support lower costs overall for processing debit cards, what we don’t want is too many unintended consequences.”
– with AAP
Get the latest Yahoo Finance news – follow us on Facebook, LinkedIn and Instagram.
