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Credit: tap-and-go contacless payment card pdq background copy space with hand holding credit card ready to pay
The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, is urging Australia’s banks to offer small businesses the cheapest pathway for tap-and-go payments. This would help them is such a challenging period as small business is facingt die to COVID-19 reduce their expenses, in the form of the merchant fees they are currently having to pay on these transactions.
Carnell pointed out that introducing least cost routing will benefit the banks themselves as well as small businesses.
“Australian banks have been doing some good work to support small businesses throughout the COVID-19 crisis,” Carnell said. “Banks have an opportunity to build on this now, by making least cost routing readily available to small businesses for tap-and-go payments.”
Merchants paid approximatley $30 million in extra fees in March alone as a result of banks directing debit card contactless payments to global payment gateways such as Visa and Mastercard.
“For too long, small businesses have been slugged with unnecessarily high fees from credit card networks, when there is a cheaper option,” Carnell stressed. “This is particularly unfair when many small businesses are trying to get back on their feet, with coronavirus restrictions lifting. Small businesses are being disproportionally hit by fees, with larger retailers able to bypass full fees by using payment systems directly or by having the market power to negotiate least cost routing with their banks.”
Carnell said that the banks had already had more than enough time to implement changes to the system and, therefore, to the fees small business are having to pay. The big banks were directed by federal parliamentary committees to embed least cost routing in the merchant services plans over two tears ago, but many have failed to act on the direction.
“The banks need to do the right thing by Australian small businesses in this economic crisis and deliver least cost routing as a universal service,” Carnell said.
The ASBFEO noted that Eftpos earlier announced that it will cut the standard wholesale interchange fee paid by small businesses in half to two cents for tap-and-go transactions that are routed to their gateway.
“Roll-out of least cost routing should be a priority for the banks,” Carnell concluded.