“Not good enough”: Pressure on banks over tap-and-go fees as uptake laggs

The major banks aren’t doing enough to educate merchants about “huge savings” associated with reforms that have made it cheaper for businesses to process tap-and-go card payments, industry lobbyists say.

Over the last year, most of the major banks have given their retail merchants the ability to decide how they process contactless card payments, bowing to several years of consistent industry pressure over the issue.

However, the same advocates who pushed the banks to implement the reforms now say they’re not doing enough to educate their merchants about the changes, and, in some cases, are providing a patchy service.

The Council of Small Businesses Australia (COSBOA), the Australian Retailers Association (ARA), the National Retail Association (NRA), Master Grocers Australia and the Australian Convenience and Petroleum Marketers Association say the banks have not been transparent enough about the changes.

“There’s not been as much uptake as we would have hoped,” ARA executive director Russell Zimmerman tells SmartCompany.

“Some of the banks have not been proactive in addressing it.”

The coalition of industry groups is also calling for the banks to ensure least-cost routing is available for e-commerce and mobile payments, particularly as these channels become more popular with shoppers.

Least-cost routing, also called merchant-choice routing, allows businesses to decide which debit network they process tap-and-go payments through, as customers no longer select themselves as they once did via swipe or insert options.

As tap-and-go payments have become more popular, merchants have been increasingly flogged with higher fees because the payments often process through Visa and Mastercard networks instead of eftpos.

Merchant fees can be four times higher through Visa and Mastercard networks than via eftpos, according to the Reserve Bank.

Westpac, Commonwealth Bank and ANZ Bank have implemented least cost routing programs over the last twelve months.

COSBOA boss Peter Strong said businesses are still being “gouged by exorbitant merchant fees”.

“In some instances, the service is only available using selected terminals or on particular plans, and this is simply not good enough,” he said in a statement circulated Thursday.

The push is just the latest round of industry pressure in the least-cost routing saga, with the banks criticised over the last year for “dragging their heels” on implementing the reforms in the first place.

The Reserve Bank has previously indicated it is monitoring the implementation of least-cost routing and will consider regulation if there are signs of “material delays” to its “wide availability to merchants”.

ANZ’s payments and merchands lead John Collins says the bank is committed to creating a simpler, clearer and more efficient payment system.

“While we have made good progress, we still have work to do in balancing transparency and simplicity for our customers, because we know small businesses are time-poor,” he said in a statement.

“ANZ is committed to working towards a payments system that is clearer, simpler and more efficient. This includes continuing our work to educate merchants and help them decide which payments route is best for their business.”

Asked to comment on the push on Friday morning, Westpac directed SmartCompany to its webpage detailing its merchant-choice routing program.

Merchants are being advised to be proactive and contact their banks about the programs themselves.

This story was updated at 4:34PM AEST August 9.

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