Australian payments provider Eftpos has announced plans to spend another AU$30 million on digital upgrades to its network over the next year, including new security features.
The AU$30 million adds to the AU$70 million Eftpos has already spent on its network over the last four years.
The new security features are expected to be available to all Australian banks and financial institutions by November, with plans for a full rollout by May 2022.
According to Eftpos, the new features mean online transactions, including least-cost routing (LCR), would enter the market with “significantly” less risk to traditional security vulnerabilities.
Eftpos CEO Stephen Benton said online retailers using Eftpos online would start being protected by new fraud scoring capabilities, as well as have the availability of additional security features such as the company’s “3D Secure” two-factor authentication functionality and tokenisation services.
“These new services mark an exciting turning point for Eftpos, online Australian businesses, and the digital economy because banks and financial institutions will be able to offer their customers competitive debit card payments services in areas of the Australian economy that currently suffer from a complete lack of competition and high costs,” Benton said.
Eftpos partnered with 3D Secure providers Outseer and Arcot, the payment security division of Broadcom, and fraud scoring firm Featurespace for the new offering.
The company said Eftpos payments are already available online for some card-on-file payments where banks have implemented the service for their merchant customers. Since launching the Eftpos digital service that enables LCR last year, Eftpos said it has been subject to zero fraud.
LCR is an initiative aimed at promoting competition in the debit card market and helping to reduce payment costs in the economy.
When a customer makes a contactless “tap-and-go” payment with their dual-network debit card — not credit cards, however — the merchant may choose to send the transaction via the debit network that costs them the least to accept. If the merchant chooses not to route, the transaction is instead sent via the default network which is programmed on the card, typically the Debit Mastercard or Visa Debit network.
If a merchant uses LCR, it should not affect which deposit account the funds are paid from, and the three networks — Eftpos, Visa, and Mastercard — offer similar protections to the cardholder from fraud and disputed transactions.
Appearing before the Parliamentary Joint Committee on Corporations and Financial Services and its inquiry into mobile payments and digital wallets last month, Benton said mobile payments tech has not been updated for LCR.
“Industry estimates indicate that up to 50% of debit card transactions will be on mobile by the end of this year. However, mobile payments technology has not been updated for least-cost routing, and higher fees are often applied to transactions made on mobile phones, due to an absence of competition,” he said.
“In other countries, this problem has been solved and least-cost routing is available in mobile wallets using one of two models, either of which could be utilised here to ensure that those schemes are available for the merchant to choose.
“Australia must maintain competition and technology sovereignty in its payment system rather than depending entirely on big tech, Visa and Mastercard.”
Attempting to dispel LCR myths, Benton said customers want the tech in place.
“Companies that are benefiting from lack of least-cost routing in new technologies may tell you that customers do not want their transactions routed. That has simply not been the case in Australia,” he said. “In fact, our consumer research shows exactly the opposite. The vast majority of consumers want to help Australian small businesses reduce their costs through routing.”
“We’re advocating least-cost no matter if it’s Eftpos or not, because we think competition is the important matter rather than Eftpos winning every transaction,” Benton added.