Tyro charge at the big four

FEW have been brave enough to take on Australia’s major banks at their own game. Even fewer succeed.

But 5 years ago the CEO of Tyro Payments Jost Stollmann saw an opportunity to crack into the billion-dollar card payments market – and it’s working.

“When I started everyone said you must be crazy. They said you cannot compete with the majors in a core banking process. But we have to get away from this idea,” Mr Stollmann says.

Delivering 127 per cent growth last financial year, Tyro is making its mark in the nations most talked about oligopoly by offering businesses an alternative to EFTPOS.

Stollmann says the Tyro advantage is created by better technology and integration – meaning a faster and more reliable service. 

Clients include Duty Free Stores, Jaycar and Chanel. The company has also developed special applications for Westfield and Coca-Cola.

But it was a deal with Medicare that proved Tyro could compete with its larger rivals.  

“Medicare wanted to replace paper-based claiming at its offices, and move this into the new electronic world. Medicare was a big thing, in terms of scaling up.”

“Tyro now processes 8 per cent of Medicare’s general practice claims. After 18 months, we are doing 10 million claims a year,” Stollmann says.

Friend of the SME

Now Stollmann wants to conquer the SME market. He says unlike the banks, Tyro is concerned with minimising the merchant’s costs.

“Our core is SMEs – what I call overcharged, underserved SMEs.”

“We are the only banking institution that is pursuing the interests of the merchants. All the others are more tied to the card holder side, so they can have nice reward programs, and they like to front them with merchant’s money.”

“We are not maximizing fees we can take from (SMEs), to cross-subsidise the other side of the house,” he says.  

Stollmann says the major banks or “veterans” are hampered by their use of legacy systems and technologies which are out of pace with modern business demands.

“For a SME, we provide better solutions because we have the technology. We are the only bank who has the technology in this space. The response times are faster and our technology does not fail,” he says.

Tyro has built a solution with MYOB for SMEs and will continue to customise client applications.

“(SME’s often) need special solutions. We are agile, so we can deliver these things.”

“It’s not enough for me just to be more competitive. We need to provide additional value. No SME has lost money talking to us. So I say trust the newcomer, give me a go and let me prove it.”

How Tyro found its way in

A former German politician and entrepreneur, Stollmann’s idea for a high-tech payment processing solution was developed against a backdrop of banking reform.

In 2004 the Reserve Bank of Australia created a specialised banking licence for non-banks to encourage competition in the payments sector.

“We are the only new entrant to the payment space that reacted to the (RBA’s) invitation. Tyro is the only banking institution that has started to compete against the major retail banks in this space,” Stollmann says.

“I would be very suspicious that the (payment space) is competitive enough, because of the nature of oligopolies. There is one Tyro, the debate should be why aren’t there more?” he says.

For more: Tyro Payments