Australia’s Card Surcharge Ban Raises Concerns for Small Businesses
Australia’s credit and debit card surcharge ban has sparked concerns that small businesses could face higher operating costs if banks and payment providers fail to reduce their merchant fees.
The Reserve Bank of Australia (RBA) has lowered interchange fee caps to help reduce payment costs for businesses. However, an RMIT University expert warns that the benefits may not reach small businesses quickly enough.
Professor Angel Zhong, Deputy Dean (Research and Innovation) at RMIT’s School of Economics, Finance and Marketing, said the ban removes surcharges from customer bills but does not eliminate the underlying cost of processing card payments.
Businesses that previously passed these fees on to customers could now face pressure on their profit margins if merchant fees remain unchanged.
Some payment providers have reduced their advertised fees, but Professor Zhong said the cuts have so far been modest. Other providers commonly used by small businesses have yet to announce changes to their published rates.
She also noted that many businesses operate under individually negotiated payment plans, meaning the actual savings may differ from advertised prices.
The RBA expects payment providers to pass on the benefits of lower interchange fees to merchants. However, it has not made this mandatory, instead relying on competition and greater pricing transparency.
The first public figures showing how much large payment providers have passed on to businesses are expected in January. The RBA has indicated it may consider further action if the savings fall short of expectations.
Professor Zhong said payment processing costs would ultimately be borne by someone, whether businesses, cardholders or customers through changes to card reward programs.
She urged small business owners to review their merchant statements, ask providers whether their fees have changed since October 1, and compare alternative payment services.
The key question, she said, is whether businesses will pay less to accept card payments six months after the reform took effect.
If merchant fees do not fall, the change may simply shift costs from customers to businesses rather than reduce the overall cost of Australia's payment system.
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Source : Press Released.
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