Retail associations push for ‘fair go’ on transaction fees

Ahead of the Reserve Bank of Australia’s review of Retail Payments Regulation, four of Australia’s leading retail associations, have united to support merchants unfairly hit by high fees for ‘tap and go’ card transactions by forming the Fairer Merchant Fees Alliance.

The Alliance, comprising of Australian Convenience and Petroleum Marketers Association (ACAPMA), the Australian Retailers Association (ARA), the Council of Small Business Australia (COSBOA) and Master Grocers Australia (MGA), aims to support Australian retailers, especially small businesses who suffer most from the excessive charges.

When customers use their cards to ‘tap and go’, the transactions are often automatically routed through expensive international payment networks. The costs are either passed on to consumers as a surcharge or higher prices, or they reduce the merchant’s bottom line.

The Fairer Merchant Fees Alliance is calling on banks, regulators and government, to take action through the introduction of Least Cost Routing (LCR), which should be automatically enabled across payment networks – or at least given as an easy option for merchants to choose.

This ensures that every ‘tap and go’ card payment is sent through the lowest cost network for that particular transaction. Sometimes this might be the international networks, but more often it will be local Australian network, eftpos. There is also the potential to implement LCR into online and digital payment systems for further savings.

In a recent Issues Paper, the Reserve Bank of Australia said, “For most merchants, payments by eftpos can be significantly cheaper for them to accept than payments via the international schemes…None of the major banks has taken advantage of the ability to implement LCR ‘in the background’ as a way to offer improved pricing for smaller and medium-sized merchants on simple merchant plans.”

COSBOA CEO Peter Strong said the fee gouging is harmful to businesses, and the banks should be doing more to educate their customers, give them options and save money for everyone.

ARA executive director Russell Zimmerman said the current system was hitting retailers hard. “With several retailers advising that they are insolvent, and many Australian retailers concerned about reduced profits, dealing with exorbitant fees forced on them by the banks is a problem they should not have to face. Australian retail needs the banks to step up, do the right thing for the retail industry, and offer LCR to all retailers large and small.”

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