NAB hatched Hive for efficient MSME payment service

• The launch of Hive a key to become more relevant in the merchant acquiring business and fend off competition
• EasyTap turns an Android phone into an EFTPOS reader to accept contactless card payments, offers daily settlement and a 1.4% flat rate per transaction processed
• Competition in the merchant-acquiring business heats up in Australia, underscoring the need for a new revenue stream.

National Australia Bank (NAB) has launched a cloud-based merchant payments portal, Hive. Since taking the helm in December 2019, NAB’s CEO Ross McEwan has been steering a strategic and operational turnaround and accelerating the digital and technology transformation of NAB, the third largest bank in Australia. The bank made a series of market moves since 2019, which include acquiring the digital bank 86 400 and Citi’s consumer bank. 

The NAB Hive merchant hub was developed in partnership with NAB and Pollinate, a UK-based fintech. Since investing in Pollinate in 2019, NAB has onboarded more than 21,000 businesses to date. 

Launch of Hive a key to become more relevant in the merchant-acquiring business and fend off competition

NAB launched Hive, a fintech innovation engine for its merchant-acquiring capabilities, in which it will invest $100 million over the next two years to better address the needs of the micro, small and medium enterprise (MSME) market in Australia. The bank will create innovative digital-led and customer-centric capabilities that deliver better support to micro and small businesses. 

"From a strategic perspective, we are focusing on a digital end-to-end experience to provide a more tailored human advice to our small businesses on how to structure a loan or how to obtain merchant payments or e-commerce facilities, among others,” said Ana Marinkovic, executive general manager of business direct and small business at NAB. 

She added, “the combination of having a good origination at the front-end and strong processing and operational back-end capabilities, combined with human expertise is what differentiates us in the Australian market”.

NAB is one of the leading business banks with $93 billion (AUD 132 billion) in business loans on its book as of fiscal year (FY) 2022. It obtained a leading net promoter score (NPS) score in the small (#2) and medium segment (#1) segments, as of September 2022 

Hive will take NAB one step further into the battleground of merchant-acquiring business where fintechs such as Block, formerly Square, and Tyro have made increasing inroads to provide seamless and frictionless ways to enable merchants to accept payments from their customers. 

The Hive team comprised of engineers and product innovation leaders has been set up as a separate team and business unit with more than 100 staff outside of NAB’s infrastructure and buildings. This independent team is integrated into the overall business and private banking division and is part of the overall strategic planning. 

“While we have significant inter-dependencies on delivering our strategic vision and mission, as a separate team and management, we want to move and make decisions quickly around learning, testing and piloting new solutions,” she explained.

Essentially, the entire exercise is about understanding and addressing the operational challenges of MSMEs, which are often unique to each industry vertical. Marinkovic is keenly aware of making this connection from a bank’s point of view.

“MSMEs want you to know their industry to help them better to grow, sustain,and manage their businesses. One aspect of it is digital solutions like Hive and Easy Tap that will help them process their payments faster and easier. These provide data and insights so that they can manage their business better,” she said. 

EasyTap turns an Android phone into an EFTPOS reader to accept contactless card payments, offers daily settlement and a 1.4% flat rate per transaction processed

EasyTap, a tap and pay app enables small business owners to accept payments by phone or card directly from their mobile phones. NAB is the first commercial bank to launch this in the Australian market. Businesses pay a flat rate of 1.4% for Visa, Mastercard and electronic funds transfer at point of sale (EFTPOS) per transaction processed. There are no upfront costs, ongoing device fees, lock-in contracts or the need to buy or rent a separate terminal. Using the app, onboarding of existing business customers takes two minutes and once onboarded, it takes 48 hours to accept payments. Settlement and reconciliation to the merchant’s NAB business transaction account is done daily, seven days a week.

“Business owners will get real-time data in the NAB Easy Tap app, eliminating the need to carry around a payment terminal and dongle and no more manual receipt keeping. Customers can view transactions in real-time, by day, week, month and quarter. You can even have a menu for products. Let’s say, you sell cupcakes, you could see how many strawberry cupcakes were sold or how many are chocolates,” Marinkovic said.  

Customers will have access to NAB Hive’s merchant portal where they can access more detailed data on their business settlement. It can advise them on the busiest time of the day, profit and loss, sales performance compared to last week or identify other retail outlets within the area.

“As we progress, we’ll continue to add functionality to this portal, such as loyalty and rewards programme.  We want our business customers to have a seamless, convenient end-to-end digital experience, from onboarding to the insights that NAB Hive will provide,” she said. 

Competition in the merchant-acquiring business heats up, underscoring the need for a new revenue stream

Block, the payments firm controlled by Twitter founder Jack Dorsey, has been steadily expanding its point of sales hardware and software solutions in Australia. It has built a strong portfolio among small businesses in the last five years to accept card payments using their smartphones. Since 2021, it has been offering payment solutions to larger merchants with more complex needs.  

At the same time, Reuters reported in October that three of Australia's biggest banks are considering a bid for payment terminals firm Tyro, which underscores the importance of having new revenue streams. 

Marinkovic believes that NAB’s advantage over Block is it integrates its tech capability with a broader banking suite of products and services across the full range of the vintage cycle, a capability that fintechs don’t have.  

“It's about our customers telling us that they want their time back. They want to focus on running their business, and Hive enables us to address a significant gap in the Australian market,” she said.