“Every time that card is used, the card providers and the banks get a cut of the fees we pay along the way. I put it to the parliament, that these kickbacks are part of the reason we’re not getting fee-free digital payments.”
Laxale, the MP for the Sydney seat of Bennelong, said text messages used to cost 25 cents a message, but these were now free.
“That same fee-free revolution needs to happen at the checkout,” he said.
The Reserve Bank is about to conduct a review of the nation’s payment system, and among the key issues to be examined are the high cost of card payments for small businesses and the surcharging of consumers.
In evidence to a parliamentary inquiry last week, Reserve Bank governor Michele Bullock agreed there were issues around the payments system.
Bullock said competition between providers and retailers should encourage lower fees, but noted businesses were required by law to offer a fee-free form of payment, which in most cases was cash.
“I don’t think we’d go as far as mandating a digital surcharge-free option, but there will be a surcharge-free option if there’s going to be surcharges permitted,” she said.
Australian banking Association boss Anna Bligh says the payment system is like 5G or water pipes – unseen but not costless.Credit: Bloomberg
Australian Banking Association chief executive officer Anna Bligh denied there were any kickback payments.
“Every time a business accepts a digital payment there is a cost to processing that transaction. This cost includes rental of the payment terminal and ensuring customer payments are made safely and securely – that is not a kickback,” she said.
“Just because payment rails are invisible, like the 5G network and water pipes, it doesn’t mean they are free to operate. They have to be built, maintained and upgraded, which all requires significant investment.
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“It is the choice of the business whether they apply a surcharge. Many businesses in Australia choose not to apply surcharges and include the cost of processing the transaction in the final price like they do with electricity or rent.”
Bligh noted there had been a 13 per cent drop in merchant fees in the 2022-23 financial year.
Australian Retailers Association chief executive Paul Zahra said while cash was important, digital payments and the benefits they offered consumers and businesses were obvious.
He said retailers, especially smaller operators, were under growing pressure to consolidate their payment systems so they could reduce administration and fee costs.
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“Retailers are facing one of the toughest economic periods in history, with rising business costs, increased inflation and steep interest rates just some of the challenges traders are working through,” he said.
“Many retailers who were previously able to absorb transaction costs are now not able to do so due to the rapidly rising costs across the board.”
A spokesperson for the Australian Competition and Consumer Commission said while businesses can impose a surcharge on card payments, it must not be more than what it costs the business to use that payment type.
Businesses must not mislead consumers about those surcharge pricing.
“If consumers consider they have been misled by a business about its displayed or advertised pricing, consumers can raise this directly with the business.
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