Calls to end unnecessary high transaction fees

The Australian Association of Convenience Stores (AACS) and the National Retail Association (NRA) has called for action to stop unnecessarily high debit card transaction fees being passed on to consumers.

According to the RBA, June saw a 19 per cent rise in debit transactions since last year, and Theo Foukkare, CEO of AACS, said a move to least cost routing (LCR) could save Australian retailers over $65 million a month, and upwards of $800 million per year.

“Currently LCR is available to everyone by the major banks, however implementing it to unlock the savings isn’t easy, by design of the big banks, as this contributes significantly to their profits. 

“Merchant fees are a cost that businesses simply must either wear or pass onto consumers. Passing them onto consumers makes them less competitive with the major players, so this presents significant challenges.”

Due to the growing use of ‘tap-and-go’ payments, consumers are no longer using the keypad and choosing the lower-cost eftpos network with most payments defaulting to the international network, meaning higher costs for the merchant.

“The new Federal Government has the power to mandate LCR as the default across all payment platforms; in-store, online, and contactless – and it will cost them absolutely nothing.

“Mandating LCR as the default will provide retailers with significant savings during this unbelievable time of the exploding costs of doing business.

“The Albanese Government must mandate LCR as the default if they are serious about helping small and medium businesses during these challenging times.”

Dominique Lamb, CEO of the NRA, said measures to remove unnecessary high fees for small business and their consumers through LCR need to be actioned as soon as possible.

“Least cost routing allows retail operators to choose the debit network with the lowest fee, which should be the default option for small businesses unless for some reason a business elects to pay more for additional services.”

Lamb said that the modern retail environment calls for default LCR for all in-store and online debit card transactions to be implemented as debit cards are increasingly becoming the payment method of choice for consumers, amounting to $74.7 billion worth of transactions in June alone.

“Australia needs an updated regulatory system for debit payments that reflects modern retail.”

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