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Retailers Hit By Higher Tap-And-Go Fees

Contactless payments have risen substantially during the COVID-19 pandemic, which has resulted in higher fees for smaller retailers, as banks send contactless payments via costly credit card networks instead of the cheaper Eftpos system.

Merchants in Australia pay approximately $4.3 billion annually in fees on card payments.

Some smaller retailers have lobbied the government and the Reserve Bank of Australia (RBA) to push banks to send tap-and-go payments down cheaper payment channels, such as Eftpos.

“Since December 2017 we have lobbied for retailers to have the ability to route transactions through the ‘least cost method’. Almost three years later, we continue to hear complaints from members that retailers are unable to route debit transactions through the lowest cost method,” Paul Zahra, CEO of the Australian Retailers Association (ARA), told ChannelNews.

The ARA wants to see the RBA mandate that Eftpos be the default scheme for routing payment unless a merchant explicitly chooses another option. “A saving for retailers is a saving to Australian households, who end up paying extra to cover these unnecessary fees,” Zahra said.

“Retailers should be very concerned about the surge in tap-and-go from a cost perspective but they have options to reduce that cost significantly,” Stephen Benton, the CEO of Eftpos Australia, told the Australian Financial Review. “They should talk to the banks about switching on least-cost routing as soon as possible.”

Such fees are generally not a problem for larger retailers, as they are able to utilise the cheaper payments systems directly.

“Many retailers, especially SMEs, don’t understand the complexity of the fees and are hesitant to renegotiate these rates. We believe many smaller retailers are paying to much,” Zahra said.

Such changes are particularly important in the current operating environment, where consumers are almost exclusively paying via tap-and-go.

“COVID-19 has put personal hygiene front and centre for Australians and this includes the way we pay for goods and services. Many retailers are requesting contactless payment be used rather than handling cash to reduce the opportunities for passing on COVID-19,” said Roy Morgan CEO Michele Levine.

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