RBA urged to act on bank fees that are “crippling” small businesses

A petition by the Council of Small Business Organisations Australia (COSBOA) and nine other leading small-business organisations, that calls on the Reserve Bank of Australia to act on “crippling” debit card transaction fees for both businesses and consumers, has gained significant traction. The petition has 12,978 signatures to date, and is getting more every day.

The petition reveals the support behind the move to give businesses access to the lowest-cost payment option through a mandated Multi Network Debit Cards system. It asks that such a system is imposed on all banks, irrespective of their size, and that the lowest cost payment route be the default for all debit transactions, whether consumers tap their card, wave their device or pay online.

Alongside COSBOA, the petition is backed by: the National Retail Association (NRA); Australian Association of Convenience Stores (AACS); Australasian Convenience and Petroleum Marketers Association (ACAPMA); Australian Association of Commerce and Industry (ACCI); Australian Lottery and Newsagents Association (ALNA); Franchise Council of Australia (FCA); The Institute of Certified Book keepers (ICB); MGA Independent Retailers; and Restaurant & Catering Industry Association of Australia (R&CA).

COSBOA CEO Alexi Boyd noted small businesses already pay significant transaction fees on the eight billion debit transactions made each year, and the RBA’s proposed changes would result in further costs.

“With the impact of COVID already causing financial pressures to businesses, the last thing we need is to add greater stress to them,” Boyd said. “The payments landscape is a complex one for most small businesses and this, combined with a lack of transparency in fee structures, has created an environment of higher than necessary costs which ultimately impact small-business owners and in turn, their customers.

“We are calling on the RBA to make a fair and equitable environment for businesses in terms of payments and merchant fees.”

Boyd said that the RBA also needs to work with the banks to eradicate what it calls “confusing” pricing methods introduced by the big banks over recent years which he said made switching to the least cost route appear (LCR) less attractive to small-business owners.

“We have evidence where small businesses have asked about LCR and their banks have come back with a new service proposal where transaction fees were increased by 275 per cent compared to existing pricing, and the previously free terminal rental had a surprising new monthly fee, potentially putting the business in a worse position overall,” Boyd said.

“The continued lack of transparency and complicated ‘switching processes’ where the small business must rely on advice from the bank that has an interest in keeping merchant fee costs high, has resulted in stifled competition and an inability to adopt LCR.

“This cannot keep going on like this, and we urge the RBA and Federal Government to make low-cost payments the default for local and small business, so we ensure the future of Australia’s local payment network, eftpos, as a choice on all debit cards,” Boyd concluded.