AACS: SMALL BUSINESSES NEED PAYMENT SYSTEM COMPETITION

16 October 2020: The Australasian Association Convenience Stores (AACS) has joined other small business advocacy groups in sounding the anti-competitive alarm bells on the proposed merger of electronic payments systems which could lead to the emergence of a single payments option for Aussie retailers – and a rise in the cost of processing transactions.

Reported negotiations between the major banks and payments infrastructure providers regarding the proposed merger of NPP Australia, Eftpos and Bpay, which could result in the creation of a single domestic payments provider, would diminish competition and increase costs for small businesses like convenience stores, AACS CEO Jeff Rogut said.

“As a general rule, whenever the major banks have an agenda to merge entities to streamline processes, alarm bells warning of the impacts on competition should sound,” Mr Rogut said.

“Even prior to the pandemic, tap-and-go payment options were increasingly being favoured by consumers. Now, they are overwhelmingly the preferred way for people to make transactions. The proposed merger of payment systems which provide the infrastructure for these transactions will have obvious, significant impacts for businesses everywhere.

“But for small businesses like convenience stores, the ramifications could be major. With no competition there is no mechanism for the market to control price and alleviate cost increases for these businesses at this delicate economic time.

“Nor is there any impetus to improve the level of customer service provided to both merchants and their tap-and-go customers.

“Of course, the other outcome is a further boost in power for the major banks. The discussions around the proposed merger have largely taken place behind the back of small business. We call on the ACCC to recognise the anti-competitive impacts of the merger and prevent it from proceeding.”

In recent times, the AACS called on Government to require the banks to offer all retailers – not just large corporates – the option of routing tap-and-go transactions through the least costly payments network.

For convenience stores, instead of being able to use Australia’s own Eftpos network, which is significantly cheaper, many of these small businesses are still forced to use more expensive international networks such as Visa and Mastercard to route tap-and-go transactions. The difference amounts to thousands of dollars each year. 

The Reserve Bank supported this call, making clear that merchants should have access to the lowest transaction cost route for tap-and-go payments.

“We believe it is now time for the Reserve Bank to step up once again and insist that all businesses have the choice to process electronic payments through the network they choose to reduce their costs,” Mr Rogut said.

“This extends to ensuring there’s competition in the market. The consolidation of payment platforms into a single provider will have the opposite – and dangerous – effect,” he said.

Further information:                                                                                 

Jeff Rogut                                                                                                                                                  

Chief Executive Officer                                                                

Australasian Association of Convenience Stores                                 

Ph: +61 467 873 789                                          

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