Australia Post is preparing to shut down the Australian operations of its online payments service, POLi Payments.
In a notice issued this week to merchants and other subscribers to the platform, POLi’s general manager Susan Nicholson revealed the company was preparing to wind down operations by the end of September.
Nicholson indicated that reduced acceptance of the POLi platform by three of the major banks had caused the business to become unviable.
In 2006, POLi became one of the first Australian fintechs to offer real-time transaction services for local consumers by getting them to link their online bank accounts directly to the platform.
The service was also supported by large merchants, particularly in the travel industry, who benefitted from near instant settlement when customers made online purchases.
However, POLi’s business case has been severely tested by PAYID and other services spawned by the New Payments Platform, which have been progressively embedded in the digital platforms of Australian banks since 2018.
“While the New Payments Platform provides an exciting frontier for payments and we were very proud to launch our POLi PAYID solution last year, sadly POLi is unable to effectively compete given the significant ongoing investment required to keep up with fast-paced innovation funded by large banks, multi-nationals and a venture capital/private equity backed industry,” Nicholson told customers in the letter.
“Globally, fraud and scams have increased and are becoming more sophisticated.
“To prevent financial crimes, institutions have adopted new software that is incompatible with traditional POLi vectors.
“Last year, two major banks stopped accepting the POLi vector and we were recently advised that a third will no longer accept POLi vector payments from mid-July 2023.
“Based on the declining acceptance of POLi in Australia, it is no longer financially viable, and we will wind up operations by 30 September 2023.”
The POLi service was controversial given that it required many debit cardholders to share the login credentials of their internet banking accounts with the POLi platform.
While most Australian banks did not prevent customers from sharing login-details with POLi, most have been issuing warnings since at least 2015 that such practices were likely to breach the terms and conditions of their electronic banking services.
This meant there had been significant uncertainty on whether POLi customers were fully protected if their accounts had been looted by online hackers or scammers.
Banking Day has been told by several industry sources that Commonwealth Bank customers would be locked out from some POLi services by the end of this month after the bank completed an update to its security systems.
That decision appears to have sounded the death knell for the POLi business.
POLi’s imminent demise has triggered concern in the air travel industry – a sector where the POLi service has been providing a bespoke payments solution for processing airfare transactions across disparate systems operated by travel agents, airlines and online booking services.
POLi provides unique services to airlines such as Qantas that facilitate the collection of surcharges on airfares.
Industry experts such as Belinda Jonovska, the chief operating officer of payments startup Waave, said Qantas would likely face a challenge finding an alternative provider to replace POLi.
“The quick deprecation of POLi is a real kick in the guts for the travel industry,” Jonovska said in a Linkedin post.
“The regulatory requirements to display a surcharged price are not quick or easy to build.
“Hopefully distribution partners are ready to jump in and build this bridge needed here to find an alternative surcharge free option otherwise the cost of travel is going to increase for a lot of consumers.”
POLi is no longer accepting new customers and is referring applicants to alternative payments providers such as Azupay, Monoova and Zepto.
According to Nicholson’s notice to POLi customers, the company is continuing to explore options for keeping its New Zealand payments operation in business.
“POLi is working closely with Merco (the New Zealand Distributor of POLi services) so that transaction processing through POLi’s. existing supported NZ banks can continue,” Nicholson said in the notice.