The Reserve Bank is in discussions with merchants, financial institutions and other stakeholders about criteria or thresholds to determine the point at which it may be in the public interest to require a BNPL providers to remove their no-surcharge rules.
Most but not all merchants that accept BNPL are prevented from levying a surcharge to recover the cost of acceptance.
As outlined in the latest issue of the Reserve Bank Bulletin, the RBA’s current view is that BNPL operators in Australia have not yet reached a point where it is clear that the costs arising from a no-surcharge rule outweigh the potential benefits in terms of innovation.
The bank’s longstanding view is that the right of merchants to apply a surcharge to recover merchant fees promotes payment system competition and keeps downward pressure on payment costs for businesses.
However, it accepts that no-surcharge rules can play a role in facilitating innovation and the development of new payment methods by helping an emerging payment service provider develop its network by making the service free to consumers initially.
The RBA says: “While some stakeholders, such as merchants, have argued that it is becoming increasingly difficult not to offer BNPL as a payment option on competitive grounds, the available data indicate that BNPL providers account for a relatively small share of Australian consumer payments overall.”
The RBA estimates that BNPL payments in 2020 were equivalent to less than 2 per cent of the total value of Australian debit and credit card purchases.
The RBA’s 2019 consumer payments survey indicated that when cash transactions are taken into account, BNPL accounts for less than 1 per cent of the number and value of consumer transactions in a given week. The share of online transactions was around 3 per cent.
The RBA said comprehensive BNPL market data are not readily available. However, Afterpay reported an average global merchant fee of just under 4 per cent for 2019/20 and Zip reported an average merchant fee of 3 per cent.
This compares with an average fee of less than 1 per cent if the payment was made using a credit card, and even less if the customer uses a debit card.