While Australia’s big four banks grapple with decades-old IT systems, new specialist service providers are quietly laying claim to small slices of the market.
Commonwealth Bank, Westpac, ANZ and NAB have long dominated Australian banking, but many say the sector failed to innovate for years and has left the door open to tech-heavy competitors.
Last year, after a trip to Silicon Valley on a study tour, ANZ chief executive Mike Smith described the wave of disruption coming for established banks as “terrifying”.
A number of alternative payments platforms are operating in Australia. Here’s who to look out for and why:
Founded: February 2003
Headquarters: Sydney, Australia
Founders: Peter Haig, Andrew Rothwell, Paul Wood
Funding: $33 million
Tyro, initially called MoneySwitch, was founded by three former Cisco engineers in response to a Reserve Bank push for more non-bank innovators in the payments sector.
It targets merchants - small to medium businesses in particular - and is one of a small handful of a specialist banking licence holders in Australia, allowing it to offer custom point-of-sale terminals that process credit and debit card payments at low cost and in real time.
Tyro is financially backed by former Westpac executive David Fite, former Bankers Trust chairman Rob Ferguson, MYOB founder Craig Winkler and Atlassian co-founder Mike Cannon-Brookes. It has been led by CEO and majority shareholder Jost Stollmann since November 2005.
It reported revenues of $39 million last financial year.
Headquarters: Sydney, Australia
Founders: Alex Teoh, Andrew Teoh
Funding: $500,000 until an August 2007 ASX listing that raised $8.7 million
Like Square in the US, Mint Wireless builds credit and debit card readers and white-label commerce and payments apps for sole traders, taxi drivers, tradies, sales people and others.
Its share price has grown 87.5 per cent to $0.30 since listing; most of the gains were made last year.
Founders said they initially found it difficult to convince banks, telcos and resellers to get on board but Mint now expects the mobile payments market to grow 185 per cent to $20 billion in the three years to 2017.
The company posted a 217 per cent rise in revenues to $960,000 last financial year, and a net loss of $3.415 million - an improvement on the $4.65 million lost in 2012.
Headquarters: Chicago, US
Founder: Bryan Johnson
Funding: $US70 million*, before eBay bought it for $US800 million in September 2013.
Braintree provides a simple platform that lets merchants process credit card payments and gift cards through their online and mobile applications.
It's like PayPal for merchants - so much so that eBay bought and added it to the PayPal family last year - and counts among its customers Uber, Airbnb and Australian broadcaster ABC.
Braintree operates in North America, Europe and Australia; its Sydney office opened last June, under the leadership of Tyson Hackwood.
It was processing $US10 billion of payments a year as of July 2013.
*This initially indicated that Braintree had a total $US95.2 million in funding; this was incorrect and has been corrected accordingly.
Founded: December 1998
Headquarters: Palo Alto, US
Founders: Peter Thiel, Luke Nosek, Elon Musk, Ken Howery, Max Levchin
Funding: Listed on Nasdaq in February 2002, acquired by eBay for $US1.5 billion that July.
PayPal isn't exactly a new market entrant, but its use in Australia is still growing. It was granted a restricted banking licence in 2006 and remains the only approved 'Providers of Purchased Payment Facilities' in Australia today.
PayPal is eBay's default payment option, and allows consumers and small businesses to send and receive money from bank and credit card accounts for a fee.
PayPal Australia processed about $6.5 billion of payments, including about $2 billion in mobile transactions last year.
Bank executives including Commonwealth Bank boss Ian Narev have openly named PayPal alongside Apple and Google as modern competitors in the banking space.
Founded: November 2011
Headquarters: Melbourne and Perth, Australia
Founders: Grant Bissett, Dominic Pym
Funding: $238,938 from Commercialisation Australia in 2013. Also backed by NAB, Perpetual and KPMG.
Pin Payments is owned and operated by Southern Payment Systems. It lets merchants accept Visa and MasterCard payments in Australian dollars, US dollars, New Zealand dollars, Singaporean dollars, Euros and British pounds.
Like many other new payment market entrants, Pin Payments plays up a simple, transparent pricing model as one of its key draw cards.
Its partners include Shopify, Xero, Ashop and BigCommerce.
Founded: February 2013
Headquarters: Melbourne, Australia
Founders: Asher Tan, Ryan Zhou
CoinJar is a Bitcoin exchange and payments platform that lets users buy and sell Bitcoin from any Australian bank account, and access their Bitcoin funds from mobile and web applications.
Merchants can use CoinJar to accept Bitcoin payments, with a 1 per cent merchant fee.
CoinJar is backed by accelerator AngelCube, Blackbird Ventures and a number of individual investors. It had more than 10,000 users as of December.
Founded: February 2012
Headquarters: Brisbane, Queensland
Founders: Brett Hales, Kerry Esson
Funding: $2.4 million
Tappr turns merchants' tablet and mobile devices into custom, point-of-sales platforms and allows them to accept credit and debit card payments through its Juvo device.
Juvo works with magnetic strip, EMV chip and contactless (NFC) technology, and communicates with merchant systems through wi-fi, 3G and 4G networks. It is expected to launch in June this year and includes marketing and analytics tools.
Tappr is also working on a customer-facing application, Nero, which handles coupons and loyalty offers.
Headquarters: Sydney, Australia
Founder: Hamish Petrie
Funding: $7.1 million
Ingogo is better known as a taxi booking service but launched a niche payment system for drivers in October last year.
The system, developed in partnership with ANZ and Ingenico, pairs Ingogo's mobile application with a wireless payments terminal via Bluetooth.
The terminal then lets taxi drivers process electronic, EFTPOS, credit and debit card transactions via contactless technology or magnetic stripe.
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