Reserve Bank governor Philip Lowe has called on global tech giants to reduce payment costs for retailers accepting payments made through smartphones.
At his keynote at today’s AusPayNet event in Sydney, Lowe said the RBA has consulted with Apple, Google, and Samsung, as well as the banks and POS providers, in order to implement “least cost routing” for merchants.
LCR will route payments through the bank-owned eftpos network, rather than via Visa and Mastercard, which charge retailers more.
Apple Pay, Google Pay and Samsung Pay “is growing very quickly, and they are often more expensive for merchants to accept,” Lowe said.
“It would be both feasible and desirable for the industry to deliver LCR functionality for mobile wallet transactions by the end of 2024.
“The next step is for the mobile wallet providers to finalise their plans and share these plans with the industry so that the necessary investments across the payments ecosystem can get under way.”
Lowe also pointed out the “large differences” in payment costs incurred by small and large businesses.
“Small businesses, on average, pay twice what large businesses pay to process the same transaction. While economies of scale explain some of this difference, they are not the full story.”
The push to LCR would eliminate this.
“LCR allows merchants to choose the lowest-cost card network to process their debit transactions,” Lowe explains.
“It also increases the competitive pressure between the debit networks, providing greater incentives to lower the wholesale fees that are ultimately paid by merchants. This is especially important for small businesses that typically can’t negotiate discounted fees with the card schemes.”
Lowe also highlights other regulations and technologies that could lower overall fees.
“Greater transparency of merchant payment costs through an expansion of the Consumer Data Right could also help drive increased competition between acquirers,” he noted.
“And new payment methods could emerge over time to compete with card payments, including through the use of QR codes for account-to-account payments at retailers.”
