Small businesses being slugged an extra $1.7 billion in fees per year

A new independent payments group has launched to advocate for fairer regulation and lower debit transaction fees for electronic payments.

Small businesses, including many convenience and petrol stations, currently pay about $1.7 billion in extra debit and credit card transaction fees annually, compared to big retailers on special rates.

The newly formed Independent Payments Forum Australia (IPF) aims to represent voices that currently go unheard in a payments debate dominated by the big banks and their subsidiaries, a few major retailers, and two large US-based payments companies – Visa and MasterCard.

Bradford Kelly, co-founder of IPF, said they want to provide a policy forum and an alternative voice on a range of critical but complex payments issues that impact millions of businesses and consumers every single day.

“We think there’s an urgent need to insist that payment fees and regulations are kept fair, and that networks provide reliable services, as our society moves away from cash. One example is that small and medium businesses are paying over $1 billion more than they need to because least cost routing for debit cards hasn’t been implemented properly by banks and other payments providers.

“The knock-on effect is that we all pay for it, through higher prices for goods and services.”

Kelly, and co-founder Warwick Ponder, believe the current payment landscape in Australia leaves little room for many payments participants to have their say and affect change in a system that is costing businesses and their customers more than a billion dollars in unnecessary debit fees.

The IPF is currently working on several key issues, which are outlined below:

  • Efficiency, security, and resilience of networks
  • Innovation and competition adding value for small businesses and consumers
  • Fair fees and surcharging, including protections for merchants and consumers
  • Least cost routing, including mobile digital wallets, online and dynamic routing
  • Transparency and fairness in pricing for all businesses and their customers
  • Appropriate regulation, controls and penalties for bad behaviour
  • Real time payments, including its fees, consumer protection and network reliability and stability
  • Access to cash 

A number of small business and industry associations are working closely with IPF on policy issues, including the Australian Association of Convenience Stores (AACS), The Council of Small Business Associations Organisations Australia (COSBOA), and the Australian Convenience and Petroleum Marketers Association (ACAPMA). 

Theo Foukkare, CEO of AACS, said payments and merchant fees were key issues for small businesses, particularly as the cost-of-living continues to climb.

“Businesses and their customers are doing it tough, and we need to ensure that payments remain accessible for everyone as cash usage declines. There is no doubt that the cost of debit payments for many small businesses is crippling. We simply don’t have the right rules in place to ensure we’re getting a fair go.”

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