Ben Zyl, Co-Founder and CEO of Waave: “Merchant fees can’t remain a monopoly robbing businesses of their already tight margins”

It’s quite difficult to express frustration through words, but Ben Zyl, the Co-Founder and CEO of Waave, manages the feat here. If you’re reading this article in Europe, where Open Banking is well established, you may well find some of his comments surprising. But in Australia, many hurdles still stand in the way of financial reform, and that means not merely frustration for Ben but extra charges for Australian consumers and businesses.

He describes his aim to “bring fairness and transparency back to payments and reinstate the connection between consumers and businesses” in the full interview below, but there are barriers. “The impetus to innovate hasn’t been there because of the profits [banks and card schemes] generate from existing card-based banking models,” Ben explains.

But if he’s learned anything from his years of experience at PayPal and other tech giants, it’s that you can’t fight progress. Waave may be the first Australian payments company to use Open Banking technology and real-time networks to enable customers to make instant payments from their bank account without the restrictions of traditional cards, but it’s part of a worldwide trend. To take inspiration from the company name, only a fool swims against the tide.

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Could you please introduce yourself to our audience and share how you ended up working in fintech?

I have over 20 years of experience working in online media, telecommunications and payments across a variety of roles for companies including Yahoo, Vodafone, PayPal and Adyen. My exposure to payments came during my time at PayPal, where I was leading the PayPal Here card reader team in Australia and helping businesses accept card payments.

I am passionate about technology and helping businesses deliver the best payment experience to shoppers. My co-founders and I were inspired to start Waave out of frustration with the clunky, outdated and costly payment systems that stem from card dominance. Businesses shouldn’t be paying exorbitant fees to receive payments, and customers should feel confident making digital transactions and not be forking out hundreds or thousands each year in card fees and surcharges.

My goal at Waave is to draw on my knowledge of the industry to bring fairness and transparency back to payments and reinstate the connection between consumers and businesses.

What do you think traditional finance and banking companies can learn from disruptors in the fintech space?

The way businesses and customers transact and understand their money is outdated, broken, and just bang average.

Even the companies that provide a great payment experience like the major tech companies’ digital wallets and PayPal, are still reliant on existing card schemes and therefore come at a huge cost to the merchant. Everyone is in bed with each other.

Banks and card schemes have had the ability to leverage technologies like Open Banking for some time, but the impetus to innovate hasn’t been there because of the profits they generate from existing card-based banking models.

Companies like Waave are stepping in to give consumers and merchants what they need and want. We provide a free, seamless, secure and instant payment experience that bypasses clunky, expensive and risky card payments – all at a fraction of the cost to the merchant. Our Open Banking licence also means we can embed our payment experience into a broader consumer offering that provides consumers with spending insights across all bank accounts. Being bank agnostic allows us to do this.

Our hope is that fintechs like ours will spell an end to price gauging and create a digital money system where consumers have control of their money and feel confident with every transaction. The market will eventually vote with its feet when consumer awareness of account-to-account options reaches a critical level. Ultimately, we should all collaborate on ways to bring Open Banking and real-time payments faster into the mainstream – like regulation that opens up digital wallets to non-card-based schemes.

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What are some of the biggest regulatory challenges affecting the fintech sector?

Compliance and the cost of maintaining compliance. Compliance is extremely important to maintaining a trusted financial framework, but for fintech and fintech startups in particular, it does throttle the speed of execution.

Which geographical hubs around the world are leading the charge when it comes to fintech innovation?

Europe is a standout – this is where Open Banking was pioneered and is therefore a template for the rest of the world. Disruptive technology companies are already delivering what the ‘big guys’ won’t. According to a Statistica report, the growth of Open Banking is so rapid that Europe is expected to see nearly 64 million users in 2024 – an increase of over 400% in just four years.

Taking Europe as our model, we know it’s only a matter of time before account-to-account payments set fire to the payment landscape in Australia. There are three main areas where we will see this surge: Recurring payments (clunky direct debits will be a thing of the past); Peer-to-peer transactions; and online and in-store retail transactions (like Waave’s Pay by Bank).

How has the role of the finance department changed with the advent of fintech?

As our shopping habits have shifted online and our use of electronic payment methods has overtaken cash, payments are no longer a static transactional step, but a vital pillar of the customer journey. Customers want as much choice in how they pay as they do in what they’re actually buying. 

Over the last ten years, payments have increasingly become known as the fifth ‘P’ of marketing, alongside price, product, promotion and place. 

The finance department can no longer sit in a silo looking at numbers. They need to work with marketing and IT teams to really understand a customer’s payments journey and how this can be optimised. Outside payments, fintech is also making the finance department’s life much easier with a plethora of digital tools and automation of old processes. But this also means they have to become more proficient as interpreters of data.

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How does your company differ from its direct competitors in the fintech space? 

Waave’s Pay by Bank was the first B2B and B2C use case of Open Banking in Australia. It also uses real-time payment networks (Pay To). Waave was the first to bring the Pay by Bank concept to Australia (instant bank transfers). We are the only locally owned and run Pay by Bank, unlike imported emerging versions of real-time account-to-account payments.

Other local players in the account-to-account space focus more on ongoing transactions (recurring direct debits) and aren’t connected to the value-add provided through Open Banking. Waave’s Pay by Bank leads the way in one-off instant payments at the retail checkout (and soon-to-be-expanded offering through our financial Insights tool). Our offering to the merchant is market-leading in terms of ease of integration, price, security, and value they can then pass on to the consumer. This is being proven in the market where major retailers are introducing the solution (e.g. Chemist Warehouse, Barbeques Galore, Eva Mattresses, Oz Hair & Beauty).

What are some of the biggest challenges the fintech sector is experiencing as a whole? 

Fundraising is a real challenge for local fintechs. Australian VCs have a very narrow view of what they look at as investable. Whilst they say they invest in startups and early-stage companies, this is rarely the case. They are also skewed to investing in B2B SaaS businesses and seldom take a moment to seek opportunities in fintech. The sector has to rely heavily on private investors.

Governments have also scaled back their support for startups in recent years which doesn’t help.

In the payments space, we are also challenged by regulatory barriers. For example, digital wallets are yet to be regulated. When they are, this will be a leap forward in the shift towards a fairer and more affordable digital payments landscape for Australian merchants and consumers.

Businesses across Australia are collectively paying close to $3 billion in merchant fees, and often these fees are passed onto consumers as surcharges or higher prices for goods and services. Currently, digital wallets are closed to any payment option besides card schemes (Visa, Mastercard). Digital wallets need to be regulated to enable other payment networks to be added and encourage greater market competition, especially in light of Open Banking and the direction we are heading in towards greater consumer control and value.

This can’t remain a monopoly that is robbing businesses of their already tight margins.

What advice do you have for aspiring professionals wanting to work in fintech?

It is an amazing sector but not for the faint of heart.