The Australian Small Business and Family Enterprise Ombudsman Kate Carnell is calling on banks to make “least cost routing” available to small business as a matter of urgency.
Ms Carnell says small businesses would benefit if banks adopted least cost routing, sending tap-and-go payments via the cheapest payment pathway to limit the costs incurred by merchants.
“Australian banks have been doing some good work to support small businesses throughout the COVID-19 crisis,” Ms Carnell says.
“Banks have an opportunity to build on this now, by making least cost routing readily available to small businesses for tap-and-go payments.
It’s estimated about $30 million in extra fees were paid by merchants during March, due to banks directing debit card contactless payments to global companies such as Visa and Mastercard.
“For too long, small businesses have been slugged with unnecessarily high fees from credit card networks, when there is a cheaper option,” Ms Carnell says.
“This is particularly unfair when many small businesses are trying to get back on their feet, with coronavirus restrictions lifting.
“Small businesses are being disproportionally hit by fees, with larger retailers able to bypass full fees by using payment systems directly or by having the market power to negotiate least cost routing with their banks.
“There has been plenty of time for the banks to implement these changes. It has been two years since the major banks were directed by federal parliamentary committees to embed least cost routing in the merchant services plans they advertise to retailers.
“The banks need to do the right thing by Australian small businesses in this economic crisis and deliver least cost routing as a universal service.
“As of July, Eftpos has announced it will cut the standard wholesale interchange fee paid by small businesses in half to 2 cents for tap-and-go transactions that are routed to Eftpos. Roll-out of least cost routing should be a priority for the banks.”