Merchant fees for card transactions and other digital transactions area big cost to Australian small businesses. In March 2020, it was estimated that businesses paid $30 million in extra merchant fees due to contactless card transactions going through the international Visa and Mastercard networks. Least cost routing is when digital transactions, including tap-and-go card payments, mobile phone payments, and online payments, are automatically processed (or ‘routed’) through the network with the lowest cost to the merchant (usually eftpos). Right now, it isn’t compulsory and small businesses have to call their bank and jump through hoops to get it implemented.
What’s more, some banks are proposing to issue debit cards that don’t work on the eftpos network at all. This will force small businesses to route transactions through the more expensive networks, Mastercard and Visa. Customers with debit cards that don’t work on eftpos won’t be able to get cash out at the check out or get real-time Medicare rebates.
The Reserve Bank of Australia is completing a review of retail payments regulation. Its interim report acknowledges that shifting away from least cost routing and choice on debit cards “would result in a significant lessening of competitive pressure in the debit market and would likely result in an increase in both interchange rates and scheme fees, impacting all merchants”.
Despite this acknowledgement, the RBA isn’t recommending any reforms to address the problem.
We’re asking for two things:
How small business owners can help
Write a letter to your local MP using this template.
Display campaign posters in your business with a QR code link to sign the petition.
Put up post cards with the QR code at your point of sale.
Post about this on social media.
Campaign materials can be downloaded below. Click the button underneath the image to download a copy.