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How to use payWave – get the low down for your business

Contactless payments are the number one way Kiwis prefer to pay today, with the payment method being used as much as EFTPOS and twice as much as cash. As more consumers adopt contactless, more New Zealand businesses are starting to tap into the power of this technology, which benefits both parties, making checkouts quicker and payments simpler.

customer paying with paywave

What is payWave?

payWave is the name of the contactless payment solution from Visa but has since become the colloquial name for contactless payments in New Zealand. 

With Visa-enabled cards, this feature is a secure way for consumers to buy your products or services using a contactless debit card, credit card, or devices like a smartphone or watch. You can identify payWave by the contactless symbol shown as a wave-like image on the front of your card.

As the name suggests, your customers do not insert or swipe any of their cards. Payments are made by waving or hovering the contactless card or device over the payment terminal, with no need to sign receipts or touch buttons. Customers don’t even need to enter a PIN for purchases under $200. With a simple tap or wave, the payment is complete!

How does payWave work?

payWave works by using a technology called Near Field Communication (NFC). In non-techie speak, NFC allows two devices to connect when they are less than 40mm apart. For a contactless payment, NFC allows your terminal and your customer’s card or device to ‘talk’ to each other about the payment details.

Behind the scenes, contactless transactions like payWave (or PayPass) work differently from EFTPOS transactions because they are processed by “card schemes” like Visa or Mastercard. This is also the case for credit card transactions and mobile wallet payments such as Google Pay and Apple Pay. 

When your customer taps their card or device, there is a bit of data ping-pong between the card issuer (your customer’s bank), the card scheme (Visa) and the acquiring bank so the funds can correctly be transferred to your account. Your Smartpay terminal identifies this type of transaction and communicates with your bank to let you and your customer know whether the transaction has been accepted.

These transactions incur additional fees to accept. This is called the Merchant Service Fees (MSF) and is what the acquirer charges your business to accept and process a contactless payment.

What is the payWave limit in NZ?

The current payWave limit in NZ is $200. This is the maximum amount that can be authorised without needing for the customer to enter their PIN. 

The limit was increased from $80 in April 2020 to help merchants comply with regulatory requirements pertaining to health, like social distancing and reduced public exposure. As a result, the usage of contactless payments spiked as both merchants and customers benefited from a more convenient checkout experience. 

For transactions exceeding $200, the EFTPOS terminal will prompt the customer to enter their PIN for processing. From the merchant’s perspective, it will still be processed as a contactless payment.

How safe is contactless payment technology?

Contactless payments have multiple layers of security and encryption technology to keep them secure. These measures ensure customers can’t make an unintentional payment, and miscreants can’t easily access the card details.

Some of the factors that make contactless payment technology safe for customers and merchants are:

  • Contactless cards never leave a customer’s hand, making it less vulnerable to card skimming.
  • Every contactless transaction has a one-time-only cryptographic code. This enables tracking of all transactions.
  • Contactless is designed for proximity only, making it nearly impossible for the thief to scan the card while the terminal reads it.
  • As an extra measure, purchases over $200 require a PIN to complete contactless transactions.
  • Zero liability fraud protection provided by card issuing schemes protects both customers and merchants from unauthorised or fraudulent transactions

Compared to older technology, contactless cards also have built-in security features, such as encryption techniques that older cards don’t.

How can businesses accept payWave payments?

With the growth in popularity of payWave and other contactless payment methods, small businesses can take advantage of this expanding customer trend to grow and future-proof their business.

Studies show that businesses that accept payWave (compared to those that don’t) experience at least double the growth rates in sales, transactions and returning customers. With more Kiwis regularly paying with contactless technology like a Visa payWave card or Google wallet, it’s a no-brainer to offer the payment methods your customers prefer.

By reducing cash handling, depositing costs and serving customers faster during peak times, businesses can optimise how time is spent during checkout and improve customer experience.

Accepting payWave (and other contactless payments) is easy if you already accept EFTPOS payments. You simply need to activate this with your merchant bank first and ensure your EFTPOS terminal is able to accept contactless payments.

Some handy tips to remember when activating contactless payments:

  • When talking to your bank, do your best to negotiate a good MSF rate. Always ask if they can offer a better deal!
  • You don’t have to absorb the fees to offer contactless payments – if you want to pass them on via a surcharge, give us a call to get this set up. We can configure the surcharge remotely and provide you with signage to place on your premises.

How to know if your EFTPOS terminal accepts payWave?

A contactless-enabled EFTPOS terminal will have an NFC reader to allow you to accept payWave and other contactless payments. But you will need to reach out to your merchant bank to enable these payments on your merchant facility.

To identify if your payment terminal accepts contactless transactions, you can look for the contactless symbol on the terminal or check directly with your terminal provider.

If you are a Smartpay customer, all Smartpay terminals are already enabled with contactless functionality. You simply need to contact your merchant bank to activate these first, and you’re good to go!

What are the payWave fees in NZ?

To accept payWave in NZ, you will likely be charged 0.7% to 1.0% if you are on Interchange plus (unblended) rates with your bank. 

Banks offer MSF packages that include blended, unbundled, or fixed rates. These rates consist of “interchange fees” and “acquiring fees” charged by the scheme, payment gateways and banks.  These fees cover services the schemes provide, including handling costs and risks associated with processing payments like fraudulent transactions and bad debt. 

The amount you will pay will depend on the nature of your business, the volume of transactions and the MSF package you negotiate with your acquirer. 

Save on fees through surcharging

Some merchants find that the increase in business generated by providing payWave transactions offsets the additional merchant fees; however many choose the option to offset this via a small surcharge. 

A surcharge allows you to pass on the cost of acceptance to your customers, essentially making this a zero-cost payment method. It can also be configured for credit cards if you choose to accept those as well.

Surcharging allows you to be flexible with customer payments while future-proofing your business to changes in technology and consumer trends.

Done right, surcharging is simple, transparent and fair to all. As a merchant, you have obligations towards your customers when surcharging. Allowing them to assess if they would like to pay via an alternate payment method or accept the surcharge. You can learn more about your merchant obligations here

The future of payWave and contactless payments

Payment technology is developing rapidly, and contactless NFC is just one approach being developed and used worldwide. We’ll continue to see developments in mobile payments, digital wallets, QR payments, and digital currencies. Recent developments in NZ legislation can provide insight into the future of contactless payments.

  • The Commerce Commission now regulates merchant service fees under the Retail Payment System Bill, which received assent in May 2022 and is being implemented from November 2022. This governs the MSF’s largest component, the “Interchange fee” charged by card issuers. The MSF reduction is expected to increase contactless payment availability in NZ significantly.
  • Surcharging will also be regulated as part of the Retail Payment System Act 2022.

With New Zealand borders reopened to international visitors, retailers can expect to feel more pressure to accept contactless payments, with nearly 8 out 10 people globally now using contactless payments.

Combined with the rapidly growing preference for contactless among New Zealanders, the argument for accepting contactless is becoming harder to deny.

Why consider Smartpay for contactless payments

With a Smartpay terminal, accepting contactless payments is easy!

If you’re with Smartpay and ready to start accepting contactless payments, getting this switched on is easy. Simply call your bank to get this setup, as soon as it is activated by the bank – your terminal will automatically be ready to go.

If you have any questions about accepting contactless payments in your business, contact the team at Smartpay today.

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