The Australian Small Business and Family Enterprise Ombudsman Bruce Billson welcomes the Government’s commitment to lowering costs for businesses through least cost routing.
Treasurer Josh Frydenberg has released the Payments System Review which assessed the adequacy of the current regulatory framework.
“The review recognised that there are regulatory gaps and reform is needed to ensure the system reflects rapid technological change,” Mr Billson says.
“It was pleasing to see the Treasurer’s letter to the Reserve Bank of Australia (RBA) supporting least cost routing.
“The Treasurer’s urging of the RBA’s Payment Systems Board to consider mandating the dual-network debits cards to facilitate least-cost routing is a game changer.
“It is a clear statement that the time for strongly worded letters to financial institutions to ‘do the right thing’ has passed and more decisive action is needed to stop small businesses and family enterprises paying more than they need to for payment services.
“For too long, small businesses have been slugged with unnecessarily high fees from credit card networks, when there is a cheaper option.
“Small businesses are being disproportionally hit by fees, with larger retailers able to bypass full fees by using payment systems directly or by having the market power to negotiate least cost routing with their banks.
“While banks have been doing some good work to support small businesses throughout the COVID-19 pandemic, there is an opportunity to build on this now by making least cost routing the default unless a small business chooses an alternative.
“The Government has committed to consider changes that may be necessary to promote least cost routing, particularly in an online and contactless environment.
“Effective regulation in this area in a post-COVID economy is essential given the shift to online and digital transactions in recent months.”