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Retail groups launch Fairer Merchant Fees Alliance to target unfair ‘tap and go’ charges

COSBOA is part of the Fairer Merchant Fees Alliance, a newly formed group that will advocate for least cost routing. Below is a media release sent out by the alliance on 28 January.

In the countdown to the Reserve Bank of Australia’s Review of Retail Payments Regulation, four of Australia’s leading retail associations have joined together to support struggling merchants who are being unfairly hit by high fees for ‘tap and go’ card transactions.

The associations have formed the Fairer Merchant Fees Alliance to push for a fair go for Australian retailers, especially small businesses who suffer most from the excessive charges.


When people use their cards to ‘tap and go’, those transactions are often automatically routed through expensive international payment networks. As a result, merchants are being slugged hundreds of millions each year in hidden fees.


The costs are either passed on to consumers as a surcharge or higher prices, or reduce the merchant’s bottom line – hitting consumers’ wallets while damaging Australian businesses, especially in the under-pressure retail sector.


This ongoing problem can be fixed by a system known as Least Cost Routing (LCR), which should be automatically enabled across payment networks – or at least given as an easy option for merchants to choose.


This transparent approach would ensure that every ‘tap and go’ card payment would be sent through the lowest cost network for that particular transaction. Sometimes this might be the international networks, but more often it will be eftpos, the local Australian network. However, today this is not automatically enabled on the payments system, and the big banks have been dragging their feet setting it up.


There is also the potential to implement LCR into online and digital payment systems, which could lead to further savings.


In a recently released Issues Paper regarding its Review of Retail Payments Regulation, the Reserve Bank of Australia said: “For most merchants, payments by eftpos can be significantly cheaper for them to accept than payments via the international schemes”. It also stated: “None of the major banks has taken advantage of the ability to implement LCR ‘in the background’ as a way to offer improved pricing for smaller and medium-sized merchants on simple merchant plans”.


The Fairer Merchant Fees Alliance wants to fix the system through action by the banks, regulators and government. It comprises the Australian Convenience and Petroleum Marketers Association (ACAPMA), the Australian Retailers Association (ARA), the Council of Small Business Australia (COSBOA) and Master Grocers Australia (MGA).


“We’ve formed the Alliance to push hard on this,” said COSBOA CEO Peter Strong. “The fee gouging is harmful to businesses, and the banks should be doing much more to educate their customers, give them options and save money for everyone.”


ACAPMA CEO Mark McKenzie said banks needed to be more transparent with their fee structures. “Payments and fees are a complicated business, and many smaller retailers struggle to understand the true nature of the costs they’re expected to pay.”


Australian Retailers Association executive director Russell Zimmerman said the current system was hitting retailers hard. “With several retailers advising that they are insolvent, and many Australian retailers concerned about reduced profits, dealing with exorbitant fees forced on them by the banks is a problem they should not have to face. Australian retail needs the banks to step up, do the right thing for the retail industry, and offer Least Cost Routing to all retailers large and small.”


Master Grocers CEO Jos De Bruin said: “The cost of not implementing Least Cost Routing is significant and unnecessary – with the current decline in retail spending, merchants are facing numerous headwinds and don’t need this as well.”


In addition to the retail association support, the Payments Consulting Network offers Australian businesses information on Least Cost Routing via its Merchant Pricing Hub website, where they can find providers and how much they could save.


A useful guide and free access to the Merchant Pricing Hub is available at: https://www.merchantpricing.com/least-cost-routing

Media contact: Ali Hiddlestone, Lighthouse Communications Group, 0467 541 542

About the Fairer Merchant Fees Alliance


The Fairer Merchant Fees Alliance comprises four of Australia’s leading retail industry associations who are working together to help businesses across the country benefit from lower card payments fees. These associations are:

• The Australian Convenience and Petroleum Marketers Association (ACAPMA) – The national peak body representing the interests of the petroleum distribution and petroleum retail industry.

• The Australian Retailers Association (ARA) – Founded in 1903, the ARA is Australia’s largest association, representing the country’s $310 billion sector, which employs more than 1.2 million people.

• The Council of Small Business Australia (COSBOA) – The country’s peak body exclusively representing the interests of small business.

• Master Grocers Australia (MGA) – The premier employer organisation for independent businesses Australia wide.

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