The Commonwealth Bank of Australia has attracted some 200 developers to its new point-of-sale (POS) payments platform, Pi, after the platform’s launch last week.
Applications are the heart and soul of Pi, which can be customised extensively to put loyalty, retail, discount and other applications at customers' fingertips during a sale.
Initially, Pi will ship within CommBank’s iPhone cradle and payments system ‘Leo’, for which applications will be restricted to those written by the bank’s developers.
But the proverbial sky will be the limit for third-party application developers when the bank ships its custom, touch-based Android tablet named ‘Albert’ next year.
According to CommBank’s executive general manager of corporate banking solutions, Kelly Bayer Rosmarin, the bank had expected to attract “a few dozen” third-party developers at the outset.
“We thought we would work closely with three to five app developers we already knew in this space, and that we would have a few dozen,” she said.
“But we’ve had more than we anticipated. We’ve done it on a standards-based platform that is easy to build on, and it’s good if there are different ways to bring the brand to life.”
Cost and competition
CommBank has yet to disclose its pricing structure for Pi, with Rosmarin saying only that merchants would “find it attractive”.
“We're the largest acquirer in Australia, and we understand how customers want and need to pay for these,” she said.
But lack of clarity around pricing isn't sitting well with Eftpos Australia, the market's dominant payments processor, which claims an installed base of more than 734,000 merchants and handles the majority of debit-card transactions in the country.
Eftpos managing director Bruce Mansfield lauded Pi as “a very exciting development that really changes that interaction between customer and merchant, making it much more inclusive in relation to how they shop and engage the payment transaction”.
“Over the next months and years you'll see a refreshing of the existing POS network in this country,” he said.
But Mansfield also expressed concern that the CommBank's eventual Pi pricing model – and its support for contactless payments through ‘digital wallets’ like those available on Android and set to ship with Apple’s upcoming iOS 6 – could help the bank tighten its grip on the merchant market.
“Technology does give you the capability to lock out your competitors, so it's important that we have an efficient and open payments system,” he explained.
“Contactless will offer challenges and opportunities, but it also has to offer choice as well; that's a very important theme and we need to deliver as an industry.”
That sort of choice, and the inevitable competition from other banks, should keep transactional prices from changing and Albert-like terminals at quite reasonable prices, according to John Tait, general manager of sales and marketing with Ingenico, which manufactured the Leo case.
“What you’ll see will be complementary [applications] rather than competing,” Tait said. “After ten years of focusing on compliance in the industry, all of a sudden we’ve got innovation – and that’s great for consumers, and merchants, and the industry.”
Read on to page two for how Pi might affect CommBank's web 2.0 competitors.
One major shift in the payments industry will be the ability for Pi to support new forms of payment from the likes of PayPal.
CommBank chief information officer Michael Harte has previously pointed to technology companies like PayPal, Apple, Google and Facebook as future competitors in the finance sector.
Overseas, PayPal has already been challenging rivals like Square's Pay With Square, Intuit's GoPayment, mPowa, PayAnywhere and others to combine competitive merchant rates with credit-card readers that work on stock-standard iPhones.
Those platforms combine the interactivity of Pi with the card-reading nous of a conventional terminal. Their standard transaction rates – in the realm of 2.7 percent – are competitive with those already paid by merchants through Eftpos.
Whether or not merchants would therefore see enough value in Pi's enhanced interactivity to justify higher prices – or whether prices would be higher at all – remains to be seen; Tait, for one, believes natural competitive forces will actually keep forcing transaction prices down over time.
PayPal – which will launch its iPhone-payments tool, PayPal Here, in Australia next month – is enthusiastic about the potential of Pi.
The technology empowers a key competitor, but could also turn the bank into an ally if PayPal were to develop a Pi application that allowed customers to pay using its digital-wallet smartphone service.
Positioning Pi as a platform for innovation spells interesting times for the payments industry, said PayPal spokesperson Adrian Christie, who branded CommBank’s offering “a really exciting step forward”.
“Seeing a major player innovate so aggressively in this space is exciting,” Christie said.
“Partnerships will drive success for both the merchant and the consumer. But a payment solution isn’t enough: it’s about developing the tools to engage with the consumer through loyalty, driving demand, and so on.”
Positioning Pi to promote digital wallet solutions could also see a new generation of loyalty applications tapping into growing usage of mobiles for payments.
According to CommBank’s Rosmarin, mobile logins to the bank's NetBank site grew from 12 percent of all logins last year to 45 percent this year.
Meanwhile, Christie noted that Australian usage of PayPal on mobiles outpaced the figure in the US.
Given that kind of growth, Pi’s greatest achievement may be its ability to remove the barriers to allowing consumers to pay any way they want.
“This isn’t something to be forced on people,” says Tait. “It will be taken up because it’s easy to use and delivering value.”