Australia’s peak small business body has called on the major political parties to develop timeframes for getting the big four banks to roll out comprehensive least cost routing services to local retailers.
There is now bi-partisan political support for imposing an obligation on the four major banks to give small retailers easy access to least cost routing (LCR) of contactless debit transactions.
LCR is a service that allows merchants to direct debit transactions to their preferred processing network.
However, the major banks are continuing to automatically route most contactless debit transactions to international schemes such as Visa and Mastercard even though the domestic EFTPOS scheme is able to process at a cheaper average price.
Labor deputy leader and small business spokesperson Richard Marles last week confirmed that his party would take steps to force the banks to provide simple access to least cost routing, although he did not reveal any details about Labor’s method and timing for delivering the promise.
In September last year caretaker Treasurer Josh Frydenberg committed the coalition to delivering small businesses simple access to LCR but he has not yet confirmed when the reform will be implemented.
While the Council of Small Business Organisations of Australia (COSBOA) yesterday welcomed policy commitments from the Coalition and the Labor parties to lower transaction fees incurred by retailers on contactless transactions, the peak body’s chief executive Alexi Boyd said the next government would need to move swiftly to lower the acceptance costs of retailers.
“We’re incredibly pleased that both major parties have recognised that small businesses pay too much for accepting debit transactions and we welcome their commitments to lower those costs,” said Boyd.
“There’s no way that small businesses can manage their fees effectively all the time because there are so many complex moving parts in the setting of merchant fees.
“What we are looking for now is to work with the regulators, government and other stakeholders to put in place timelines for making easy access to least cost routing a reality.”
Boyd said she was disappointed and frustrated that LCR rollouts continued to drag on at the major banks.
“The LCR issue has been frustrating for us – it really feels like we’re stuck in the mud on this one and that we don’t have a regulator able to advance the reform that small businesses need,” she said.
The importance of LCR was highlighted in Labor’s small business platform released last week.
It is one of six centrepiece policies that an Albanese government would implement to mitigate costs borne by small businesses.
The cross-party support for LCR follows an intense bout of lobbying by COSBOA and other small business groups in the middle of last year.