Australian online shopping spending surges after bumper Xmas

In bad news for bricks and mortar retailers, Australians are continuing to shop more and more online, with $5.52 billion spent online in the December quarter, according to new figures from online payments provider eWAY.

Over the Christmas period alone $3.92 billion was spent, up 28 per cent on the previous year.

eWAY chief executive Matt Bullock said the average purchase cost of online goods had also jumped by 4 per cent.

“This growth isn’t necessarily because consumers are spending more. They’re mainly diverting a larger percentage of their Christmas budget to online channels,” he said.

Boxing Day sales trend.
Boxing Day sales trend. Supplied

“An interesting trend with Boxing Day sales is emerging, with eWAY recording relatively average sales in the few days post Christmas the past two years. The first week of January appears to be the new key window, with sales volumes surging during the first week of the year.”

The average transaction cost in the December quarter was $167, according to eWAY.


The top three categories for online shopping were electronic goods, travel and household appliances.

Spend over the holiday shopping period in 2015-16 and 2014-15.
Spend over the holiday shopping period in 2015-16 and 2014-15. Supplied

But as usual Christmas shopping was left until the last minute, with eWAY, which powers online payments for 23,000 online shops, reporting a huge increase in sales on December 21.

More and more international shoppers are also starting to buy from Australian stores, with the value of international sales lifting 61.3 per cent year-on-year.

“The weaker Australian Dollar has contributed to this trend in the past 12 months, but it’s also recently become easier for businesses to sell, market and ship to other regions,” Mr Bullock said.

“The market is really opening up for Aussie businesses.”

Why tokenization is the key to mobile payment security

Mobile payments can be a finicky business. Consumers are presented with a broad range of payment options and channels – from Apple Pay to Google Wallet to Visa Checkout – all vying for majority adoption. The industry’s brightest minds and deepest pockets are at work to create better commerce experiences, including Samsung, Wal-mart, Google, PayPal and scores of startups in the fintech space.

In fact, during the first three quarters of 2014, global payments and transaction startups raised a combined $1.18 billion through 75 funding deals. Plus, more and more banks have launched plans to build mobile payments directly into their mobile banking apps. By and large, these mobile payment initiatives are building solutions based on NFC (near field communication) technology, designed to create a fast and convenient payment experience.

You’re familiar with NFC technology if you’ve used the aforementioned Apple Pay on your iPhone 6 or Google Wallet on your Android device. With a couple of quick steps on your phone screen and a tap on a terminal near a cash register, the mobile device communicates a payment from your virtual wallet to the retailer.

NFC also lets our mobile devices do a broad range of other things, from unlocking car doors to sharing photos with others in close proximity. Since the launch of Apple Pay, though, NFC for payments has finally found its moment in the spotlight.

PayPal has adopted NFC with its Here point of sale reader, NFC upstarts like Mobeewave have raked in new funding rounds, rumors are swirling about the potential for Microsoft to jump on the NFC payments bandwagon, and VCs from SBT Venture Capital to Sequoia Capital have remained active investors in the NFC and broader payments space.

With all the innovation and momentum around mobile wallets, NFC or otherwise, payment security is a huge concern to merchants, issuers, payment networks and any new wallet provider. Demonstrated by the number of high profile data breaches that have plagued the U.S. within the last year, payment data security is absolutely essential as consumer adoption grows.

Unfortunately, NFC is only a functional technology, not a thorough security safeguard. It needs another complementary layer of security on top of it to complete the payments software package. All of this sets up rather nicely for tokenization to emerge as a new defense against mobile payment fraud.

In its most basic form, tokenization aims to lower the value of sensitive data stored on mobile devices and transmitted over networks during payment. It consists of replacing a payment card’s static credentials (like the 16-digit card number and expiration date on a plastic card) with virtually substituted credentials that limit the impact of a data breach or sporadic card theft.

Token credentials are limited to use on a specific device, at a specific merchant or for specific types of goods and services.

While my company, Gemalto, recently announced broadened tokenization capabilities, we certainly aren’t the only ones concentrating on the technology. SimplyTapp, Sequent and Visa are all examples of companies (some being competitors) investing in the development and implementation of tokenization. This widespread attention is driven by a few main reasons why embracing tokenization just makes good sense.

1: Flexible Security
Whether payment card credentials are being provisioned onto an embedded secure element, a SIM card or a mobile application, tokenization strengthens security. The token cannot be used beyond its pre-defined purpose, and hence is useless for hackers trying to commit fraud via online purchases or by cloning magstripe cards.

Thanks to tokenization, emerging alternatives to secure element-based NFC, like host card emulation (HCE), have been endorsed as secure by payment brands, finally opening the door to independent, bank-owned mobile payment apps.

Banks and payment providers can use HCE and tokenization to create their own payment apps without necessitating access to complex mobile storage and chips. Combining tokenization with techniques to encrypt and hide security keys and sensitive data in the code of mobile apps helps secure HCE-based wallets on Android devices.

2: Instant Use
Before the introduction of tokenization, digitizing payment cards for mobile wallets often involved a review and approval process by the bank, which could take anywhere from minutes to days. Banks and wallet providers have understandably been asking for a way to complete enrollment instantly and minimize registration abandonment.

Ecommerce, as a comparative example, can have an average abandonment rate of 75 percent, strongly linked to additional registration steps at checkout. These extra steps in the ecommerce checkout experience are comparable to a hamstrung user sign-up process in mobile payments. Both create friction and reduce the number of users that stick it out until the end of the road.

Tokenization has made it so that customers can sign up and be ready to pay within seconds – a huge factor in mobile payments convenience and adoption.

3: Minimal Pushback
The road to including tokenization technology is fast and straightforward for all involved parties. Tokenization has no impact on physical retail NFC terminals, on the processing side of payments or on the perceived consumer purchase experience. There’s no need for merchants to invest in new hardware or software and, for issuers, implementing tokenization has little impact on their existing back-end technology.

Frankly, there are few reasons mobile payments innovators shouldn’t embrace tokenization to improve their security. It will even work in concert with the upcoming migration to EMV cards, so the time is especially ripe to make a move. Securing payments with tokenization, whether card-based, contactless or mobile, increases protection of face-to-face transactions and already holds great promise for remote or online transactions as well.

So far this dynamic ecosystem is brewing healthy competition and innovation, giving wallet providers and issuers plenty of security options. While tokenization solves many security challenges, it is worth pausing to remember that securing payments doesn’t stop here. Security is always a moving target as fraud techniques evolve.

Even after tokenization becomes ubiquitous, the entire industry, from established giants to burgeoning startups, should continue challenging itself and asking: “Beyond tokenization, what’s the next technology that can make mobile payments that much easier and more secure for consumers and providers alike?”

Online Retail Up 22% in Q1 2015 – Power Retail

Payment gateway eWay has released figures for online retail spend across Australia in the first quarter, showing a 22% rise over Q1 2014.

If eWay’s latest data is anything to go by, online retail spending in Australia is surging again. Data released by the Australian payments provider, which claims 25 percent market share of local online payments, reported a total spend of $4.37 billion from January to March 2015, up 22% over the $3.6 billion spent online in the first quarter of 2014.

It represents a strong start for online retailers in 2015, with the first quarter of this year only 6.9% down on the October-December quarter boosted by Christmas shopping.

Melburnians remain the most active online shoppers in the country, with CBD addresses accounting for 2.59% of all local parcel deliveries, well ahead of the Sydney CBD on 1.85%.

Tuesday night shopping is peak time – online shoppers are most active between 6pm and 9pm on any given night, and Tuesday is the most popular day of the week for online shopping.

eWay CEO Matt Bullock is bullockish about prospects for online spending this year. “eWay expects to reach record transaction volumes in 2015, as a result of Aussie businesses realising the potential of omnichannel retailing in Australia,” he says.

He says the radical swing in the value of the Australian dollar in global trade has spawned a rapid rise in international online exporting, with a 30% uplift in purchases delivered to postcodes outside Australia.