FinTech Australia has released its formal position on the RBA’s review of merchant card payment costs and surcharging, advocating for an approach which keeps competition high but does not place an outright ban on surcharging.
The view was formed after months of consulting with the peak body’s member base of over 400 companies and commissioning research into Australia’s payments industry from economics, research and strategy firm Mandala.
As part of the recommendations to the review, FinTech Australia broadly proposes:
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Improving transparency in the card payments sector, to help consumers and merchants make better decisions regarding their method of payment.
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The promotion and broader introduction of surcharge-free payment options leveraging new technologies, such as our New Payments Platform (NPP) and PayID.
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That banning debit surcharging or mandating differentiated pricing in particular are likely to jeopardise competition, merchant choice and fintech innovation, with flow-on effects for small businesses and consumers.
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If surcharging restrictions are pursued, a carefully calibrated cap on surcharging would be more reasonable and effective as opposed to an outright ban, so as to not reduce competition in the sector or force smaller merchants to raise the prices of their products to compensate.
FinTech Australia CEO Rehan D’Almeida said it was a “delicate issue” across the organisation’s member base.
“Surcharging changes are a popular piece of policy that directly tie into cost of living concerns. The fintech industry has always aspired towards the financial betterment of all Australians. This made the industry’s internal deliberations difficult as the popular, surface level solution of banning surcharges at first glance achieve this goal,” he said.
“But, one of the fundamental challenges of Australia’s payment ecosystem is that it’s incredibly complex and full of invisible players that facilitate transactions. Much of the innovation in the sector is unknown to a lot of consumers, and has already quietly worked to drive down costs and fees. The solution lies in amplifying this.
“What we learned from talking to our members and commissioning research is that direct and severe actions, such as a surcharge ban, could actually adversely affect both consumers and businesses in the medium to long term.”
D’Almeida said many fintechs are driving down the costs associated with our intricate card payments system.
“Compared to the UK, New Zealand and US, Australia has some of the lowest costs per transaction. Even with this, average merchant services fees fell from 0.83% in 2015 to 0.65% in 2024 largely due to competition driven by the fintech sector behind the scenes,” he said.
“Meanwhile, in other jurisdictions — such as the UK — where bans have been introduced, it has led to a reduction in competition, and an increase in debit card fees to compensate.
“Our research with Mandala found that if surcharging was banned, SMBs would face the brunt of the fees associated with debit card fees, absorbing $3100 a year in additional card-related fees. And the most common response by these small merchants, our research found, would be naturally to lift the prices of their goods and services as a result.”
“Small businesses in particular have relied on the current framework for over two decades, so taking that away will have an immediate and deep impact on them and their bottom line. Consumers however, can find a reprieve from these charges via surcharge-free digital methods of payment.
“We need to work to make these channels more accessible, while ensuring we don’t deal a blow to merchants and competition from local fintechs.”
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