As a matter of urgency, the Australian Small Business and Family Enterprise Ombudsman Kate Carnell is calling on banks to make ‘least cost routing’ available to small businesses.
Ms Carnell says that if banks adopted least cost routing thereby sending tap-and-go payments via the cheapest payment pathway, this would benefit small businesses who are often disproportionally hit by merchant fees.
“Australian banks have been doing some good work to support small businesses throughout the COVID-19 crisis.
“[They] have an opportunity to build on this now, by making least cost routing readily available to small businesses for tap-and-go payments,” Ms Carnell says.
It’s estimated that during March about $30 million in extra fees were paid by merchants, due to banks directing debit card contactless payments to global companies such as Visa and Mastercard.
“For too long, small business have been slugged with unnecessarily high fees from credit card networks, when there is a cheap option.
“This is particularly unfair when many small businesses are trying to get back on their feet, with coronavirus restrictions lifting,” Ms Carnell adds.
According to Ms Carnell, small businesses largely feel the brunt of disproportionate fees as larger retailers are potentially able to negotiate least cost routing with their banks to bypass fees.
She adds that larger retailers may also be in a position to bypass full fees by using payment systems directly.
“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,” Ms Carnell underscored.