RBA conducts retail payments regulation review

NATIONAL

MGA TMA and COSBOA delegates met with RBA Governor Philip Lowe and his team on the 9th July 2021 to discuss a number of matters pertaining to the Retail Payments Review, which is currently underway.

MGA also met with Federal Treasury to voice our concerns that Least Cost Routing must be considered to be a default facility to assist small businesses in making a payment route choice to help them save on costs. As Members have no doubt witnessed

RBA Meeting 9 July 2021

in their businesses, the “tap and go” payment phenomenon continues to accelerate. Driven by the COVID–19 restrictions, the consumer has quickly converted to contactless payments via their debit cards and digital wallets. These non-cash transactions are costing MGA TMA members a fortune in card payment fees to the banks. MGA TMA has strongly advocated for “Least Cost Routing” (LCR), which allows you, the business owner, to choose between transacting a person’s payment via eftpos or the two global cards – Visa and Mastercard. The eftpos route is 40% less in costs.

LCR will allow businesses to choose LCR, which they cannot do because the banks are reluctant to make this facility available to small businesses. Something must be done to help relieve our members of these exorbitant costs because, unlike other industry sectors, we cannot pass this cost on to our customers. The RBA undertakes reviews approximately every four years. Each review contains some strategic, longerterm topics and areas relevant to trends currently happening in the industry. As part of this review, the industry trends that the RBA will be looking at include issues such as:

• Emerging growth of the Single

Network Debit Cards and how they could change the economics

of previous regulatory steps. With debit card usage now significantly outstripping credit card usage, issuers have been looking for new ways to increase their interchange income.

They have been using single network card products to do this.

• The gradual rise in scheme fees in recent years and its impact

on overall merchant fees. As interchange fees have been reducing due to increased transparency, the opaque scheme fees seem to have been increasing, thus negating cost benefits for merchants.

• The rise of Buy Now Pay Later (BNPL) services and how they should be regulated in the

payments market. With increasing media commentary on BNPL and the rising share prices of the providers, any potential regulation would significantly impact the industry.

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ACCC payments enforceable undertaking Meeting 11 Aug 21

MGA met with the ACCC team, including Chairman Rod Sims and a team of 4 other Commissioners, concerning the amalgamation of 3 payment platforms, BPay, NPP and eftpos. We are concerned that the new entity with a Board of Directors largely made up of the four major banks and the three retail giants; Coles, Woolworths and Wesfarmers, could hold back eftpos from being a vital competitive force for the two global debit card providers, Mastercard and Visa. The entity proposing the amalgamation of the three payment platforms has proposed an “enforceable undertaking” to deliver on several of the initiatives small businesses have been advocating for regarding least cost routing and enabling payment fees to be reduced. MGA has made a submission to the ACCC articulating the concerns MGA TMA’s members have with the potentially anti-competitive nature of the amalgamation and the effects on small businesses. There are many payment method matters we are dealing with simultaneously, all as important as each other, so we will do our best to navigate through this review. MGA TMA will keep members informed of any further progress regarding this matter.