RBA Tinkering Again with Interchange Fees

[bobbinbrisco]

Banks gouge $500m in tap-and-go fees: RBA

Big banks and major credit card companies face the loss of half a billion dollars in payment charges to retailers for "tap and go" transactions after the RBA said it might force them to use the cheaper Eftpos network.

www.afr.com

AFR article today showing RBA proposing to make banks use the cheaper EFTPOS network rather than Visa/Mastercard.

Big banks and major credit card companies face the loss of half a billion dollars in payment charges to retailers for "tap and go" transactions after the Reserve Bank said it might force them to use the cheaper Eftpos network.

The RBA is concerned retailers are paying too much for the increasingly popular payment service, and wants banks to direct them through the cheaper Eftpos network instead of the system operated by the global credit card companies Mastercard and Visa.

The central bank could consider mandating “least-cost routing” as part of its comprehensive review of payments regulation taking place this year. This could save the retailing industry around half a billion dollars each year, improving margins for retailers and reducing prices for customers.

Another devaluation looming...

 

[daft009]

swipe if you want eftpos. tap if you want credit.
not rocket science jeez RBA

 

[Pete98765432]

Wouldn’t this only apply to debit cards? Credit accounts don’t go through Ettpos.

 

[theblank]

AFR article today showing RBA proposing to make banks use the cheaper EFTPOS network rather than Visa/Mastercard.

Could you post the entire article please? I can only see first paragraph or so due to paywall.
(or is what you posted within the code parematers the entire article? it is very brief)

 

[opusman]

It would have to only be for debit cards, doesn't make sense if you tap a credit card for it to go through the Eftpos network.

 

[glasszon]

Guess RBA hasn't learned the lesson yet with the interchange fee, any so called "benefit" only went to the retailer and the smart customers loses out in the form of lower rewards from credit cards, looks like RBA just wants to keep hammering away until there's no rewards credit card left in Australia.

 

[N860CR]

It seems Coles are already doing this. I did my 5 taps for the ING card for the month and noticed they processed as EFTPOS and not Credit.

 

[woodborer]

Coles, and various Wesfarmers group[ companies already do this. It is causing some charging issues on legacy accounts.

Coles and Wesfarmers (excluding Bunnings) have started to roll out software changes on their merchant terminals from 1 October 2019 to update transaction routing capabilities. This change will process contactless multinetwork debit card transactions (Visa payWave) via the eftpos network instead of Visa or Mastercard networks. ie. Least Cost Routing.

 

[Franky]

I saw an article yesterday about Visa & MC doing something similar in the US. Same result I guess, user pays as always... I did wonder how long it would take to filter thru to Oz.

 

[Doctore1003]

Interesting graph in the RBA issues paper showing the drop in merchant fees in recent years, and hence the devaluations:

 

[theblank]

Perhaps it would be better for the RBA to start a marketing campaign to retailers, to highlight the cheaper method to create demand for the product.
cheaper for all.

 

[gregff]

The banks could offer the customer the choice on a on debit card account for tap-and-go transactions to default to: (i) using the VISA or Mastercard scheme (equivalent to inserting the card and pressing credit button) or, (ii) to using the eftpos route (equivalent to pressing the "savings or cheque" button).
You could imagine a scenario where the customer does a one-time logon to his/her online banking to select the default preference and the bank would program the card chip to indicate which route/scheme was supported as the default for tap and go.
For at least some EMV debit card chips that instruction might be written to the actual chip pretty much instantly the first time it was used in an ATM or merchant terminal and reside on the card itself. For other types of card, a query would be made to the bank (just like a validty/security querty or an available balance query) and the bank would send the customer's instruction to the terminal as to the customer's preferred method of routing for tap-and-go transactions.
Thus, the customer would have the choice! And possibly better protections (like better refund conditions or bonuses/rewards and a better international tap-and-go experience) from choosing the VISA/MC scheme ("credit") route.

 

[Diadrat5]

The RBA is usually late to the party (like it is now mulling over the buy now pay later after it is in the market place). When we were developing the 'tap n go', it would have been timely for the RBA to come out and provide some guidelines of where it wants us to go. To put in the changes now to choose the cheapest route (i.e. EFTPOS) would require full scale development and the whole kaboodle in rolling out the new software, chip card etc, a cost that no doubt will flow eventually through to the customers. I could be wrong but Coles, which was spun out from Wesfarmers, has probably separate business arrangements with card issuers (like ING based on agreed risk criteria) to approve withdrawal from their debit card transactions without a PIN, even if transaction amount is less than $100.

 

[support]

Could you post the entire article please? I can only see first paragraph or so due to paywall.
(or is what you posted within the code parematers the entire article? it is very brief)

Members should only be posting snippets of content that is behind a paywall. While I appreciate this means not everyone can read it to discuss it, the content is behind a paywall for a reason.

The full length article that was posted following your request has been removed.

 

[samh004]

Interesting graph in the RBA issues paper showing the drop in merchant fees in recent years, and hence the devaluations:

That graph seems to suggest the EFTPOS fee is slowly rising. What is to stop whatever happened in 2007 when it lurched higher by quite a bit?

 

[ethernet]

Banks gouge $500m in tap-and-go fees: RBA

Big banks and major credit card companies face the loss of half a billion dollars in payment charges to retailers for "tap and go" transactions after the RBA said it might force them to use the cheaper Eftpos network.

www.afr.com

AFR article today showing RBA proposing to make banks use the cheaper EFTPOS network rather than Visa/Mastercard.



Another devaluation looming...

Too late, already happened. Plot $AUD against say Phil Peso(supposed to be a poor performer) over 5 years.
For this reason there will be no electoral donations given to the incumbent .gov. Forget J curve, it is more like an S Bend.