Friday, June 12, 2015

Some Frequently Asked Questions about EFRTS™
By Mark Johnson – CEO Receipt Reliance Pty Ltd

Following on from  TheBig Picture On Digital Receipts and Digital Receipts At Your Bank WIIFM  (see below) - articles that outline the concept of EFRTS™ and the major benefits for consumers, merchants and banks – here is a list of Frequently Asked Questions that I have received to date.

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Q: What is EFRTS™?

A: EFRTS™, or Electronic Funds & Receipt Transfer System is an idea for a system and a method of capturing receipt data electronically at point of sale, either in-store, online or in-app, and then transmitting that digital receipt data to a storage location at the customers bank or to another storage location that can be accessed by the bank. When implemented, the digital receipt will be linked to the payment data that is already available to customers now via their online/mobile banking facilities and could be viewed, sorted, printed or emailed as required.

Q: What happens with cash tenders?

A: EFRTS™ does not cater for payments made with cash; a card transaction (physical card, mobile or in-app) must occur if a digital receipt is to be sent to your card issuing bank. If cash is used, then as is the case currently, a paper receipt may be issued if requested. If you don’t favour any particular means of payment, then you may be inclined to adjust your habits and use less cash and pay with your debit or credit card more often so that you can have the convenient access to a digital receipt which is safely and securely stored at your bank.

Q: If I have multiple bank accounts, will I have to look in more than one place for my receipts?

A: Yes, though generally most people have a limited number of accounts to keep track of whereas trying to remember every merchant you purchased something from and what digital receipt solution they use , would be much more difficult.

Q: What happens if I switch banks, how will I access my old receipts?

A: This is a common question I receive. Currently, if you close an account with a particular bank, you typically no longer have access to your transaction history for the account you had, and as your receipts would be stored against those transactions, the ability to access those receipts via online banking may also be unavailable. However, I expect that banks will enable the export of receipts in much the same way as they do for transaction history today.

Q: What do I mean by ubiquitous with regard to EFRTS™?

A: For EFRTS™ to be effective it needs to be everywhere - ubiquitous. Regardless of what POS (point of sale) system a merchant is using, or even what country you’re in, when a non-cash purchase is made your payment transaction finds its way back to your bank, and with EFRTS™ implemented, so would your receipt.

Q: Why is it important for the digital receipt attached to my transaction to look just like one the merchant might have printed in store rather than a generic list of items?

A: There are a number of reasons why this is important:
Ease of identification of the merchant via their unique receipt design or store logo, Ease of identification by the merchant when a customer wishes to make returns or exercise warranty rights. Marketing opportunities for the merchant via receipt design plus offers, vouchers and coupons will be preserved as part of the receipt to enrich the post sales experience for both the shopper and merchant. Tax Office requirements (Refer next question). Data for linking, PFM (Personal Financial Management) and analytics purposes can easily be extracted separately and sent back to the bank along with the digital receipt image. Alternatively, once captured, the data could be taken from the digital receipt image back at the bank.

Q: Are digital receipts accepted by tax offices?

A: Yes, subject to certain conditions common to most tax offices such as provided they are a true and clear re-production of the original receipt as generated by the merchant, flow directly to the owner or the owner’s nominated custodian of the receipts (in this case the bank) without modification. For example refer to Australian Taxation Ruling TR 2005/9 in particular sections 25, 35, 36, 57 and 58 via this link.  Many other countries have similar rulings.

Q: Apart from being a tax office requirement in some countries, why is it important for the digital receipt attached to your transaction to be unmodifiable once it leaves the POS?

A: For any new system like this to be adopted by consumers there must be a high degree of trust in it. Currently, when a customer is handed a paper receipt after a purchase, that is their proof of what they bought and it cannot be modified or changed by anybody else once they have possession of it. Customers (and merchants), will want the same for a digital version of their receipt. When a digital receipt is generated at the POS (whether that be a physical POS, or virtual as in the case of an online purchase or via a payment button in-app), it should not be able to be manipulated or changed in any way once issued. This reduces any opportunity for error and/or fraud to occur. 

Q: Would I have to pay a fee for this digital receipt service from my bank?

A: Ultimately that decision will be made by each bank. In my experience though, most people don’t mind paying for something as long as it is value for money. Unlike many bank fees and charges that are often perceived as concocted with no real link to the cost of providing a service for the fee charged, this digital receipt solution is a real and tangible product banks could offer their customers to make their lives easier.

According to research conducted by Dan Gellar on behalf of MRI (Market Rates Insight) and referred to in this article, and as stated by Dan Gellar on a previous episode of the radio show, Breaking Banks, approximately 50% of bank customers are willing to pay up to $120 per annum for a range of new and useful services that improve and add value to their lifestyle. The EFRTS™ digital receipt solution would certainly fall into that category.

Alternatively, banks may wish to offer this service free of charge with costs offset against savings in fraud losses, inter-bank fees and customer service inquiries to name a few. Early adopters would attract new customers and give their existing customers incentive to stay with them, thereby strengthening their customer base.

Financial industry experts predict that the next ten years could see banks relegated to ‘back end pipes’ if they don’t remain agile and embrace and adapt to the incredible amount of innovation taking place in the payments landscape. New offerings must solve a problem or address a pain point without adding friction; the storage and management of receipts is an issue in need of an innovative solution like EFRTS™.

Q: Will I have to register my credit card number anywhere to receive digital receipts?

A: No, you will not have to register your card details with any third party as your bank already holds all the necessary information.  Understandably, consumers want to guard their online privacy and are increasingly reluctant to give out personal and/or financial information that could be compromised via a data breach.

All you’ll need to do is let your bank know that you wish to ‘opt in’ to receiving digital receipts. Of course depending on the merchant, you will still be able to receive a printed receipt if requested, but you would also receive a digital copy stored safely and securely at your bank.

Q: What sort of spin off services do you foresee banks being able to offer customers as a result of implementing EFRTS™?

A: Immediately I think of enhanced merchant information with perhaps a link to the merchant website, enhanced product information with a link to the manufacturer’s website, and perhaps warranty alerts when a product warranty is nearing expiration or a product recall is in effect. Imagine including receipts in bank feeds to your accounting software already attached to their respective transactions with 100% accuracy…saving time, reducing friction, adding convenience.

In the future, POS systems will become commonplace in all businesses where a receipt has to be issued. Banks will offer new sorting and classification tools, will build stronger alliances with solution vendors and it will be another major step towards a completely paperless financial system. This is what going digital is all about.

Q: How did you come up with the idea for EFRTS™?

A: EFRTS™ was inspired by a dream I had back in 2009. In this dream I had been shopping and upon leaving the store I was questioned by security staff about my receipt. The receipt was not in my shopping bag with the goods which prompted the security person to ask me to step back inside the store for further investigation, the implication being that I may have stolen the goods.

In my dream, there was a public computer terminal available and I was able to log into my online bank account and find the payment transaction I had just made in the store. Then by ‘double clicking’ on the payment details a digital image of my store receipt appeared on screen and from there I was able to print it. I showed the printed receipt to security staff and I was allowed to leave the store.

As I lay half asleep contemplating what a bad experience it had been, I remember thinking “thank goodness for digital receipts”. However, as I woke up and reality hit, I realised that we don’t have digital receipts stored at our bank.  Given that we have the internet, email and digitisation of all sorts of documents already, it seemed only logical to have digital receipts too. My thoughts were that we trust banks with our money, why not our receipts as well. 

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