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Australian retailers don't want to charge customers 'tap and go' fees anymore – and they're fighting the banks to eradicate them
Australians and their retailers are sending 'tap and go' card fees to international payment networks, and the total cost runs into the hundreds of millions.
Four retailer bodies have now joined together to eliminate the fees, claiming Australian banks simply need to open up access to an existing low-cost alternative.
The line is consistent with the Reserve Bank of Australia (RBA) which will formally review the surcharging in the coming months, and likely scrutinise the banks for "dragging their feet".
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Do you know how much you're paying every time you spend?
On top of the price tag, and beyond a myriad of other fees you're potentially paying, you might also unwittingly be copping another for simply tapping your card.
"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," Council of Small business Organisations Australia (COSBOA) CEO Peter Strong said in a statement provided to Business Insider Australia.
The fees are currently charged by global payment networks, which get involved when a card is tapped instead of inserted or swiped. These middlemen charge sometimes exorbitant amounts for the service, as opposed to using the regular EFTPOS system, and could be costing Australians in excess of $500 million a year. Not surprising, considering more than 90% of face-to-face transactions are contactless, the highest percentage in the world.
While retailers pay these up-front, consumers are effectively the ones holding the bill when they either cop a surcharge – often without notice – at the point of payment, or they suffer higher retail prices as a result of desperate merchants. In either case, it's a no-win situation for both under pressure retailers and Australians with dwindling disposable cash.
Four of the country's largest retail groups including the COSBOA have now banded together to form the Fairer Merchants Fees Alliance to eradicate 'tap and go' surcharging outright, putting pressure on Australia's banks to be more transparent.
"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 Association executive director Russell Zimmerman said.
It doesn't have to be this way. Banks are able to provide lower-cost options to retailers, but currently don't do so automatically, and are "dragging their feet" to fix the issue, the Alliance claims.
"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," Zimmerman said.
It's not as if the banks aren't aware of the problem either. A frustrated Reserve Bank of Australia (RBA) announced late last year it would hold a formal review into why banks aren't offering low-cost options, known technically as 'low-cost routing' (LCR).
"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," it noted in a preliminary paper.
Until banks do, Australians will keep getting squeezed on a fee many of them aren't even aware they're paying.
