Woolworths takes on the big banks with new payments business

Supermarket giant Woolworths is set to become a major competitor in Australia’s $700 billion payments industry after setting up its internal payments system as a new standalone company called WPay, which will offer its services to other merchants.

Woolworths began building its own in-house payments platform back in 2007, and has since grown it into Australia’s fifth-largest processor of card payments behind the big four banks, covering some $50 billion worth of transactions a year.

A website established by the supermarket operator to market WPay pitches the platform as one “ran by retail experts, not bankers” and says the company is creating “Australia’s leading” payments service.

Woolworths CEO Brad Banducci (left) and WPay general manager Paul Monnington (right): The supermarket operator is expanding into payments.

WPay will be set up as a new business unit under the Woolworths Group, and the platform will become the payments provider for liquor stores Dan Murphy’s and BWS once Woolworths completes its de-merger of its Endeavour Drinks division later this month. Big W and formerly Woolworths-owned service station business EG already use WPay.

The platform will also be offered to other merchants, providing them with digital and in-store payment solutions including payment terminals, along with analytics, fraud management, funds settlement and gift card support. Woolworths chief executive Brad Banducci said it made sense to extend the service to other retailers after building it internally for over a decade.

“We believe there is value in extending the benefits of the investments we’ve made in our payments platform to other merchants who may not have the scale to build it themselves,” Mr Banducci said. “Payments are an increasingly important part of the shopping experience both in-store and online, and we bring unique expertise to this space as retailers.”

Woolworths’ move to establish itself in the payments sector means the retailer will almost immediately become a sizeable competitor to both the banks and smaller payments services such as ASX-listed Tyro, Square and Australia Post-owned SecurePay. Mr Banducci used to be the chief financial officer at Tyro and still holds shares in the business.

It will also serve to broaden Woolworths’ ‘ecosystem’ of businesses outside of supermarkets. The retailer has been making efforts over the past 18 months to expand its reach into other areas including investments in numerous startups and, most notably, a $550 million acquisition of food services business PFD.

Paul Monnington, a former NAB employee who’s Woolworths’ general manager of fintech, has been appointed as general manager of WPay. He said the business would enter the sector with a “strong Australian pedigree”.

“Aside from payments, we know merchants are also looking for simpler ways to integrate gifting, loyalty and direct marketing platforms to engage customers while maintaining direct relationships. We look forward to partnering with merchants to help bring this to life,” he said.

Woolworths said it was also looking into new ways to allow customers to pay digitally in-store via WPay in the months ahead.

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