CBA & ANZ Urge RBA To Regulate Afterpay
ANZ Bank and Commonwealth Bank are throwing their support behind the Reserve Bank, saying regulatory action should be taken to enable retailers to surcharge customers who use buy now, pay later schemes, including Afterpay.
It comes after the buy now, pay later company previously criticised the possible regulations from the RBA, saying it would ‘stifle innovation’ in the financial services sector. Afterpay executives had instead suggested regulation should be left to parliament.
Some in the industry believe the move could damage Afterpay’s business model, but the two banking giants have thrown in their support for action by the RBA to ban the ‘no surcharge’ policies used by the buy now, pay later payment schemes.
Afterpay, a short-term lender that has seen drastic success including the surge of its market value hitting $10 billion in the past 12 months, makes most of its revenue from charging retailers fees of between 3 to 6 per cent of the purchasing price when customers buy products through its platform.
This is much higher than retailers usually pay to accept payments from credit cards from the major banks – with Afterpay also requiring retailers to not add surcharges to payments in order to recoup these costs.
The RBA is considering intervening to enable merchants to impose a surcharge because of concerns that buy now, pay later schemes are driving up retailers’ payment costs, during a time of already challenging retail conditions and stifled economy.
In submissions made to the Reserve Bank’s review of payments regulation, ANZ and Commonwealth Bank argued for the no surcharge policies to be dropped, arguing this would create a fairer playing field in the payment sector.
‘ANZ supports the right of a merchant to surcharge and the RBA’s view that this increases cost transparency in payments, promotes efficient customer choices and assists merchants,’ the bank’s submission stated.
‘ANZ supports the consistent application of this framework to all participants in the payments system, including BNPL providers.’
The Commonwealth Bank also urged a ‘consistent approach’ to how the payment sector is regulated, encouraging the RBA to create regulation.
‘CBA would encourage the RBA to ensure there is competitive neutrality of regulatory outcomes, to products and providers operating in the same market,’ Commonwealth Bank said.
But Afterpay still stands by its position to not be regulated by the RBA, arguing the company acts as more than a payment structure and is also a marketing platform that competes with Facebook and Google to generate publicity for retailers.
Zip Money, who also offers buy now, pay later services in competition with Afterpay, also spoke out against any regulation from the RBA, stating it too acted as a marketing agent and that there was no evidence buy now, pay later schemes were leading to higher inflation rates.
National Australia Bank and Westpac also made submissions to the RBA’s review of payments, but they were not made public.
Both banks have been contacted for comment.