Retailers Want Tap Fees To Go
An alliance of four leading Australian retail associations have combined their efforts to rid the retail sector of nearly $550 million worth of transaction fees applied to ‘tap and go’ contactless payments.
The Fairer Merchant Fees Alliance is now forging ahead to lobby banks, regulators and the government to make changes to how contactless payments are processed.
According to the AFR, contactless transactions are routed through expensive international payment networks rather than lower-cost debit scheme networks such as EFTPOS.
A purchase of $100 will incur a transaction fee of roughly 40c, which is four times higher than EFTPOS.
These transaction fees are estimated to be costing retailers between $350 million and $550 million a year, which is ultimately passed on to the customer.
The alliance is pushing for the Least Cost Routing (LCR) system that automatically routes contactless payments to the cheapest option.
Alternatively, the alliance wants retailers to have easier options regarding transaction processing.
According to Russel Zimmerman, Australian Retailers Association executive director, Coles, Chemist Warehouse, McDonald’s and Hungry Jacks have all switched over the LCR.
‘There’s a lot of money to be saved if we could get them to understand what [LCR] is all about,’ said Mr Zimmerman.
According to a previous Reserve Bank report regarding transaction fees,’None of the major banks has taken advantage of the ability to implement LCR ‘in the background’ as a way to offer improved pricing for smaller and medium-sized merchants on simple merchant plans’.
Comprised of the ARA, the Council of Small Business Australia (COSBOA), the Masters Grocers Association and the Australian Convenience and Petroleum Marketers Association (ACAPMA), submissions will be made to the Reserve Bank’s Retail Payments Regulation Review.
The review is expected in March or April.