Mobile Payments in Australia – CBA Kaching

Today CBA released their much anticipated mobile payments iPhone app Kaching. CBA have a strong technology team and the leading bank in Australia in terms of mobile payments. Their new app allows similar functionality to Google Wallet in that it uses NFC (Near Field Communication) technology to pay with the phone using paypass (linked to a CBA card). The only problem is that the iPhone 4s or any of it’s predecessors don’t have a NFC chip so in order to use the Kaching app in this way you’ll need to purchase a special iCarte case which is NFC enabled.

The app also allows mobile peer to peer payment. You can pay bills via bPay, pay friends via facebook and pay friends via email or mobile number. To my understanding how this works is if the recipient is a Kaching user it will simply add the funds to the user’s Kaching nominated bank account. If the recipient is not a Kaching user the funds will be transferred to a holding account and the recipient will need a unique code to access the funds. This code is given to the recipient by the person sending the money.  Once the recipient has the code they can transfer the funds to any bank account in Australia. So in essence Kaching, really does two things:

  1. NFC payments
  2. Pay people via facebook, email or phone (instead of memorising people’s account number and BSB number)

I think CBA are doing great things in terms of technology with their social campaigns and mobile initiatives. Kaching is a cool app and will definitely be new technology for a lot of Australian users however I don’t think Kaching is disruptive or innovative enough to make mobile payments mainstream in Australia. I say this for a few reasons:

  1. Kaching doesn’t allow you to link other non CBA credit cards to the app to allow NFC payment (for obvious reasons).
  2. Kaching should be or at least should also be an Android app. A lot of mobile phones that support the Android software have NFC chips built in and would allow CBA users a much more frictionless experience with NFC payments. iPhone users at this stage need to purchase the iCarte. I think CBA created Kaching hoping that the latest iPhone 4s/5 would have a NFC chip.
  3. It is a hassle for payment recipients without Kaching to access their funds. This is a similar issue with PYGG – there is no incentive for people to request others to pay them via PYGG or Kaching. Non Kaching users who get paid via Kaching peer to  peer are unable to use those funds to pay for anything unless they withdraw it. PYGG users who are sent money are currently not able pay for things in a retail environment. They can just transfer money among themselves. PayPal users on the other hand have much more of an incentive to ask others to pay them via PayPal. PayPal payment recipients also pay for goods and services using PayPal so the money can be conveniently used.

Here are some possible solutions in my opinion (may not have CBA’s best interests but would facilitate the growth and success of mobile payments):

  1. Allow users to link any credit or debit card to allow NFC payment
  2. Have the app across both android and ios devices (which I believe they are working on)
  3. Allow peer to peer payments to be sent to a prepaid card which can be used via NFC

I do think this is a good step for CBA as they are securing themselves as market leaders in mobile payments in Australia. Overall great innovation and a great app from CBA.

  • James

    Having worked for the bank, I can address a few of your concerns.

    “Kaching doesn’t allow you to link other non CBA credit cards to the app to allow NFC payment (for obvious reasons).” “Allow users to link any credit or debit card to allow NFC payment”.Well yes. This would be great, and I suppose customers would need to allow banks to share information (including confidential financial information) between one another for this to work. I agree, though, this would be a big win for consumers.”Kaching should be or at least should also be an Android app. A lot of mobile phones that support the Android software have NFC chips built in and would allow CBA users a much more frictionless experience with NFC payments. iPhone users at this stage need to purchase the iCarte. I think CBA created Kaching hoping that the latest iPhone 4s/5 would have a NFC chip.” “Have the app across both android and ios devices (which I believe they are working on)”Well, if you’ve used the “mobile” version of Netbank, you’ve seen what a mess it is when you try to “standardise” apps across different platforms. Also, looking at the press release, and considering that close to 80% of the bank’s users log on from an iPhone handset, it made sense that they would develop for the iPhone first. I’m sure that they are working on an Android app, which would fill the gaps.”It is a hassle for payment recipients without Kaching to access their funds. This is a similar issue with PYGG – there is no incentive for people to request others to pay them via PYGG or Kaching. Non Kaching users who get paid via Kaching peer to  peer are unable to use those funds to pay for anything unless they withdraw it. PYGG users who are sent money are currently not able pay for things in a retail environment. They can just transfer money among themselves. PayPal users on the other hand have much more of an incentive to ask others to pay them via PayPal. PayPal payment recipients also pay for goods and services using PayPal so the money can be conveniently used.” ”
    Allow peer to peer payments to be sent to a prepaid card which can be used via NFC”No, that’s not entirely true. If you’ve done a transfer to that person before and then do a Kaching transfer, the funds will be available immediately. (Of course, you could do it as a direct transfer to their accounts through the app, which would be a lot more straightforward.) Also, wouldn’t you say that PayPal users are also restricted, as they are unable to use those funds unless they’re buying something online? And withdrawing from PayPal can be a hassle. Even though you might take issue with that last statement, I doubt there’s a problem with the next one: PayPal is restricted to online environments – your bank account, however, can be used both online and at a physical POS (provided that you have a MasterCard or Visa card). And I would interpret that as more functionality, not less.

  • Hi James, thanks very much for reading my article and leaving your comment addressing some of the points I raise.

    1) I completely understand the rationality between keeping the linked cards only CBA cards. I just think it would be nice to have all your cards linked :p
    2) Having read a lot of the comments and feedback online I think having an android app would have worked potentially as a customer acquisition tool as people seem to be willing to almost switch banks to use Kaching. I know android is on the table at CBA so this isn’t really an issue.
    3) To my understanding with Kaching you can transfer funds peer to peer straight into someone’s bank account as long as they have a bank account linked to Kaching. If the receiever is with another bank they will need to go to http://www.commbank.com/collect to claim their money.
    Yeh PayPal is restricted in a way as well however the money in a PayPal account is more accessible than having to go to the www.commbank.com/collect to claim your money. That’s the reasoning for perhaps someone linking a prepaid card that could be instantly used.

    With all this being said I think Kaching is great innovation for Australian banking and I look forward to seeing more from CBA. 

    What role did you have at CBA? What are you doing now?