A bit of nationalism can save hundred million dollars for Austrailan retailers
The Reserve Bank of Australia (RBA) expects the banking industry to stop automatically directing debit card payments through the two global networks, Visa and Mastercards, and give retailers the cheaper option to use local network EFTPOS instead.
Global card schemes MasterCard and Visa, alongside the major four banks, dominate card payments systems in Australia. EFTPOS is owned by domestic financial institutions and retailers. The RBA says debit card payments, Australia’s most frequently used method, processed through Visa or Mastercard cost retailers more than twice as much as using EFTPOS, according to the article published on paymentscardsandmobile.com.
The retailers’ association estimates this adds up to extra costs of between A$300 million and A$500 million ($200 million and $340 million) each year. – We have made it very clear to the banking industry that we expect them to develop the functionality to allow the merchant to choose which payment rails it goes through, the international schemes or the EFTPOS schemes – Lowe added. – If that process doesn’t work then we would have to consider a regulatory solution.
The banks had promised to develop systems to facilitate the cheaper route for retailers – Lowe said, adding that his preference would be not to have to intervene.
The RBA is reviewing payments regulations to see what strategic issues need to be tackled, from the impact of new payment technologies and new entrants to regulatory technology and an electronic form of banknotes.
– One of the possible reasons for the major banks dragging their feet on least-cost routing is that they each have very extensive relationships with the large international schemes. We will be exploring this in the review – Tony Richards, the head of payments policy at the RBA, was quoted as saying in the Australian Financial Review.