Yahoo Finance Chemist Warehouse's controversial cashless move to avoid $15 million fee
The discount pharmacy chain will be introducing QR codes for customers to pay for their goods to cut out the middleman.
Chemist Warehouse is hopping on a new payment trend to avoid being stung by a nasty and hefty fee. Card surcharges have been chipping away at Aussies' wallets for more than two decades now and there are calls to have them scrapped altogether.
However, QR codes have emerged as a new way to cut out the middleman and allow 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.
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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.
QR codes becoming the way of the future for payments
Chemist Warehouse will be using codes that have been 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
A Sydney MP has called on the Reserve Bank (RBA) to nix surcharges on card transactions and tap-and-go phone payments, launching a petition to overhaul the pesky fee that costs Aussies $4 billion a year.
Jerome Laxale, who represents Bennelong, has launched a campaign to amend 20-year-old provisions that charge businesses to use card technology, with those fees then shafted onto customers.
Laxale said it was time the rules were reviewed.
“We’re in the middle of a cost of living crisis. Consumers are being charged blended rates, 1.1 per cent to 1.6 per cent and it all adds up. To consumers that’s around $140 a year,” he told NewsWire.
“Cash is down to 30 per cent, debit is the new cash. Why is it that we are still paying increasingly exorbitant fees each and every time that we present our card or we tap.”
His petition comes ahead of the RBA’s “holistic review” of regulations around payments, including greater transparency around costs and how they’re being passed onto consumers.
The central bank’s Payments Systems Board is set to receive submissions in the next few weeks and begin consultations in December.
While Laxale said it was his preference for the RBA to address the issues, he intends to push for further government action if an agreement cannot be reached.
“I want the RBA to do what other reserve banks have done across the world, and legislate in favour of small businesses and consumers, because the inequity here doesn’t make sense anymore,” he said.
“I think the good times should come to an end for these banks and card issuers”.
- with NCA Newswire
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