Zeller launches iPhone payment scheme as CEO downplays further merchant fee regulation

Australian payments platform Zeller has launched its Tap to Pay on iPhone system, with CEO and co-founder Ben Pfisterer promising a best-in-class experience for merchants — and a fee structure that fairly represents the hidden costs of providing point-of-sale services.

Zeller’s Tap to Pay on iPhone system allows merchants to accept contactless card and digital wallet payments via their Apple device, instead of using a traditional point of sale (POS) terminal or card reader.

The company says merchants can effectively take payments with nothing more than a late-model iPhone and the Zeller app, sidestepping more traditional POS hardware entirely.

Zeller promises a flat 1.4% merchant fee for all payments processed through its Tap to Pay on iPhone system, including American Express payments, with custom merchant fee rates available for businesses with larger sales volumes.

The launch arrives after iPhone payment acceptance solutions from the likes of Westpac and Tyro.

Speaking to SmartCompany, Pfisterer said his business’ point of difference is its all-in-one app, as opposed to separate apps launched by other Tap to Pay on iPhone providers, like Westpac’s Eftpos Air solution.

Doing so is a “convenient and logical” alternative, Pfisterer said, and ensures merchants “don’t have to download another app, or maintain another app”.

Like its major competitors, Zeller already offers POS hardware.

However, Pfisterer claims beta testing shows Zeller merchants are likely to use that hardware and Tap to Pay on iPhone in complementary ways.

Some sales may be processed at the counter, while others may be processed via iPhone in queues or on the road, he said.

“Ultimately, we don’t care what device they send the payment,” Pfisterer continued.

“We’re rather indifferent.”

Launch comes as merchants pass on transaction fees

The launch of Zeller’s new solution comes as its merchants, many of them small businesses, brace against inflation and seek cost-cutting measures.

Zeller’s own data shows the use of surcharging among its merchants has grown this year, as retailers and hospitality businesses look to pass the cost of payment acceptance onto their consumers.

Regulators are keeping an eye on how banks and payment providers level those merchant fees on merchants, too.

The Reserve Bank of Australia has given the banks and POS providers until June 2024 to increase access to least-cost routing — a system allowing merchants to select card payment options that slug them with the lowest possible fees — before it pushes for regulation.

The cost of payment acceptance is also higher for small businesses than larger businesses which can negotiate more lenient rates, RBA data shows.

That includes the cost of interchange fees or the fees a merchant’s bank pays a customer’s bank every time a payment is transferred.

In broad terms, Pfisterer said the cost of payment acceptance is now a fair trade-off for the services companies like Zeller provide to their merchants.

“I definitely think the regulation side, interchange reform particularly, has done its job,” he said.

“I do think sometimes the broader cost of what it takes to accept a payment is somewhat forgotten… In Australia, it’s a very cost-effective way to accept payments.

“There are a lot of other costs that go into it. Whether it’s onboarding customers, keeping their money safe, making sure that compliance and regulation are met, providing strong customer service, making sure that they’re secure from end to end, that they get their money.

“There’s a lot more that goes into it than just a race to the bottom on cost.”

When asked about the prospect of further crackdowns to ensure competition in the payments market, Pfisterer said, “I don’t think there’s too much further regulation required”.

Zeller itself has enabled least-cost routing for a year, Pfisterer added.