Banks told to lower payWave fees for merchants
Customers will soon have the option of selecting EFTPOS for tap-and-go purchases made with their debit card.
Australian banks have been ordered to allow merchants to send contactless tap-and-go payments through as EFTPOS transactions by April 2018. The recommendation came from the House of Representatives Standing Committee on Economics, which threatened regulatory action against the banks should they not comply by the given deadline.
Australians love to tap-and-go, and have really embraced the contactless payment technology for everyday purchases made with debit. However, banks don't currently allow merchants to choose the route through which a contactless payment is processed, with payWave transactions going through the Visa or Mastercard credit card system. Many consumers may not be aware just how much this convenience is costing Australian businesses and local merchants.
It may not seem like such a big deal on the surface, but having these contactless payments made via debit cards go through the Mastercard or Visa system is costing Australian businesses $290 million a year. This is because it costs more to send a transaction through as credit.
Australian small business Ombudsman Kate Carnell said, "The average total merchant fee for a debit transaction is 0.26 percent with EFTPOS and 0.58 percent with Visa or Mastercard and it’s higher for small businesses. Small businesses are unwilling tax collectors for banks and international credit card companies."
Although it's small businesses taking on the excessive costs, it can also be an inconvenience for consumers. When a contactless payment is processed as credit the transaction will sit as "pending" for several days in their bank account. EFTPOS transactions allow these payments to be processed in real-time.
"Shoppers aren’t given a choice with payWave, as banks don’t allow merchants to choose the route through which contactless payments are processed. Consumers and small businesses are being exploited for utilising the convenience of tap-and-go," said Carnell.
Consumer choice was cited as a key benefit of this recommendation, with the report by the House of Representatives saying, "Merchants should be able to choose whether to route these transactions through Eftpos or another channel, noting that consumers may override this merchant preference if they choose to do so."
Of the Big Four banks, ANZ is definitely ahead of the pack in terms of digital payment solutions. In October, ANZ became the first financial institution in the country to allow its customers to make contactless payments via Apple Pay through EFTPOS. The change means ANZ customers can make tap-and-go purchases with their smartphone using Apple Pay, and the transaction will be processed in real-time as EFTPOS rather than credit. In November, ANZ rolled out this offering to its customers using Android Pay also.