A massive $290 million burden on businesses, particularly SMEs, looks to have a limited lifespan as regulators and new competitors combine to shake up the payments space.
Kate Carnell, the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), has called on banks and merchants to cut transaction fees for so-called ‘tap-and-go’ services.
“The average total merchant fee for a debit transaction is 0.26 per cent with eftpos and 0.58 per cent with Visa or Mastercard and it’s higher for small businesses,” Ms Carnell said.
“Shoppers aren’t given a choice with payWave, as banks don’t allow merchants to choose the route through which contactless payments are processed.
“It’s estimated that processing tap-and-go transactions through credit cards instead of eftpos costs businesses $290 million a year.”
Ms Carnell added that it was crucial to shift the burden away from SMEs, and that the cost benefits of an increasingly cashless society trickle down to everyone.
“Small businesses are unwilling tax collectors for banks and international credit card companies. They don’t have the negotiating power of big business to get special deals,” she said.
“As we move towards a cashless economy, it’s vital that transaction fees are kept as low as possible.”
It comes as specialist payment players increasingly look to compete with the major banks and card makers to provide SMEs with a more cost-effective and efficient means of processing payments.
Seemingly pre-empting Ms Carnell’s statement, Australian payment network Tyro announced it would move to a ‘least-cost routing’ method in the new year, in a bid to achieve the cost reductions outlined by the ombudsman.
Tyro executive director and acting CEO Rob Ferguson noted that four in five Australian consumers (82 per cent) use contactless payments at least once a week, underlining its popularity as a service.
“Our plan to decrease acquiring costs for debit contactless payments through the eftpos network will be seamless for merchants, easy to enable and there will be no extra fees,” Mr Ferguson said.
“This initiative is a win for our customers. Tyro will continue to be on the front foot in engaging the payments industry on issues and take a lead in change.”
Meanwhile another Australian payments provider, mobile app Invoice2go, recently announced its own tap-and-go payments offering.
Supported by PayPal Here, the company’s mobile point of sale (mPOS) service grants SMEs access to the increasingly popular tap-and-go option, with the device available to purchase for $49.
“Tap and go is a ubiquitous way to pay now and we want to empower our customers, the majority of whom are one-man-bands, to also be able to leverage this trend,” said Michael Ramsey, head of product at Invoice2go.
“Now plumbers, florists, dog walkers and accountants alike can have the same opportunities, and look just as professional, as the biggest retailers.”