Small business owners lose hundreds of dollars to New Zealand mobile payment company

  • News
  • December 14, 2015
  • Elly Strang
Small business owners lose hundreds of dollars to New Zealand mobile payment company

Trouble with a mobile payment system has left hundreds of Kiwi companies out of pocket. After paying upfront costs to purchase card reading devices provided by a New Zealand company called Swipe, customers are seeking legal action after ongoing network outages left many without electronic payment facilities for days at a time.

A complex legal situation lies behind the issues. Swipe is the trademarked name of technology owned and operated by Optimizer HQ, a company directed by Manas Kumar.

Kumar has a 41 percent share in Optimizer HQ. The company has an unusual 193 allocations of shares, from places such as Whangarei to as far flung as Texas in the US.

Optimizer HQ owned a subsidiary company, Odev, which was sold before being put into liquidation on December 10.

 Another company called ‘4468440’ owned by Optimizer HQ was also sold and put into liquidation on the same day.

According to, several other companies of which Kumar was the director have now either been struck off or are in liquidation.

Kumar has not responded to requests for comment.

McDonald Vague liquidator Jared Booth said the businesses were sold prior to the date of his appointment as liquidator, and he would be able to provide further information this week.

Swipe has not escaped these sweeping changes. Customers reported on Saturday that they were told Swipe HQ’s e-gateway and online service have been sold to a competitor, while the K1 reader device is being removed from the market from today.

One customer said the competitor it’s been sold to is omnichannel payment provider eWay, but an eWay spokesperson disputed that claim and told The Register it hadn’t bought Swipe HQ.

Swipe’s K1 card reader device allowed merchants to process credit card payments through a smartphone application combined with its hardware device, which plugs into an audio input. It also sold technology for online sales.

Via Swipe's website

In a Stuff article from 2013, Kumar said Swipe technology was aimed at small businesses or “micro-merchants” with small turnovers.

Lee Smith, a customer of Swipe HQ, runs a small business making and selling children’s clothing and accessories, which she sells at markets in Auckland and online.

She says when she signed her business up to the K1 reader device and online payments system in 2014, she had to tell Swipe HQ what her turnover was.

“They could’ve predicted the money they were going to make, it’s not million dollar companies,” Smith says. “It just seems like it was poorly thought out from the beginning.”

She says she was initially a strong advocate for Swipe HQ and recommended it to lots of people.

The technology worked well for her small business, she says, as it meant she had no overheads on the quieter months and didn’t have to pay a fee.

However, a month or so ago, problems with the service became apparent.

“The service worked really well, but I think they didn’t do their due diligence on how much money they needed to make and they got to the point where they realised they weren’t making enough money. Suddenly everything changed, I lost hundreds of dollars at a market last week because the reader wasn’t working,” Smith says.

Optimizer HQ was previously given publicity pushes by larger companies like Spark and Xero promoting its product.

However, a Spark spokesperson said the company hasn’t done any dealings with it since earlier this year.

“Our relationship with Optimizer involved us referring our customers to the Swipe product if the customer was looking for a mobile payment solution (so essentially lead generation) – from there, the customer dealt with Swipe directly. We haven’t worked with them in this capacity since late May this year,” she said.

“It’s really disappointing when a New Zealand based company like Swipe does this to New Zealand small businesses,” Smith says.

“The fact it had Spark’s backing, which made it look like a reputable company with a strong backer, then they disappeared - it makes it hard.”

Ongoing issues

Swipe HQ’s initial sales pitch to business owners promised no additional hidden fees.

“With Swipe it's just 2.75 percent per transaction for most businesses or 0.95 percent for charities, and there's nothing else - no setup, no monthly, no gateway fees, no fixed-term contracts,” Kumar said to Stuff in 2013.

In November this year, customers were shocked to find the company added on a minimum transacting fee of $35 per month onto K1 readers if they didn’t reach a certain number of credit card transactions.

However, if they chose to leave the company as a customer, they wouldn’t be refunded the initial $399 + GST start up free they paid up front.  

Many understood Optimizer HQ tacking on fees as a last-ditch attempt for the company to make money. The email to customers read:

The latest Terms and Conditions were published on July 31st 2015, this can be found on our website at

One of the most important changes is the addition of a 'minimum transacting fee'. For your reference this is Clause 21 in our Terms and Conditions. 

What is the 'minimum transacting fee'?

The minimum transacting fee only applies if you have a mobile reader, such as the K1 reader. If you are unable to process through certain limits of CREDIT card transactions in a calendar month, then you will incur a minimum transacting fee, which is charged 3 business days after the last day of that month. This is processed via direct debit. The 3 limit ranges are,

* If you transact less than $2,000 in credit card transactions per month, then you will be charged a minimum transacting fee of $29.95+GST.

* If you transact more than $2,000 but less than $4,000 in credit card transactions per month, then you will be charged a minimum transacting fee of $19.95+GST

* If you transact more than $4,000 in credit card transactions, then there will be no minimum transacting fee.

However, as many of its clients were small business owners, their sales weren’t able to reach the amount necessary to avoid a transacting fee.

The payment system then proved unreliable, as both online and card reader customers have experienced several outages in the last few weeks.

Smith says initially, Swipe HQ was keeping in touch with customers and would send emails that its service was out.

However, when her card reader went down at the Coatesville markets on December 6, she couldn’t get hold of anybody from Swipe HQ.

The company’s 0800 number also doesn’t work when called from a mobile.

Another storeholder had to make about 20 phone calls before their calls were answered and they were unaware there was an outage, she says.

At a loss for what to do

The downed systems and lack of communication have impacted on many business’ sales, causing customers to flock to the Swipe HQ Facebook page in search of answers.

Here’s a selection of comments from clearly frustrated customers:

“You seriously make me so angry, I'm currently sitting at a market with no eftpos machine and turning customers away. Not only am I loosing money I'm annoying customers which now might not return. Sort your shyte out Swipe otherwise my business will be taken elsewhere!”

“Why have we never had any problems with the system until the last month or so? You bring in new charges but service sucks lately. Very unhappy about losing sales especially at this busy time of year,” wrote another.

“YOU HAVE GOT TO BE KIDDING???? We are loosing thousands in our busiest month due to all your errors! AND you still havent even informed us! Look at your photo history - its all "outage" alerts! Sort it out!”

Some customers managed to get a partial refund for their card readers earlier, but they have since become more difficult to obtain.

More than 100 Swipe HQ customers have since formed a group on Facebook and are considering a class action lawsuit against the company.

However, a solicitor has told them it will be hard to initiate now that the company is in liquidation.

A recent email to a customer stated money from transactions is in a trust account and merchants will be settled the money they are owed, but there is no mention of refunds for its services.

The small business owners who bought the Swipe HQ card readers are out of pocket and are at a loss for what to do.

They run small scale businesses on their own from home or at local markets, and signed up to Swipe’s services to save money, rather than lose it.

Anyone who can help them or wants to join the action against Swipe HQ can find them on Facebook by searching for the group, which is called ‘Taking Swipe to Fair Go’.

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