Small businesses and their industry associations are beginning to mobilise to jointly bargain with banks and payments services providers over payments fees.
The recently formed Independent Payments Forum yesterday presented a highly reformist scheme to the assistant treasurer Stephen Jones, small business minister Julie Collins and fee campaigner and Labor backbencher Jerome Laxale MP.
The IPF also met with Opposition shadow ministers and their advisers.
“Providing SMEs permission to collectively bargain on payments fees” was the eighth point in what was, naturally enough, a 10 point plan. And it has the potential to be the biggie.
Eight influential small business representative organisations, including the peak body COSBOA, are members of the Independent Payments Forum, and historically the likes of the Australasian Association of Convenience Stores have been well informed on payments matters.
Now they may be prepared to radically lift their game. SMEs and their industry associations will need to apply for clearance from the ACCC, a process that will take well into next year to progress.
“In the absence of reforms, that is, structural reforms to bring down payments costs, then [collective bargaining] is a tool that SMEs need to have; a level playing field” Theo Foukkare, CEO of AACS told Banking Day.
“In an ideal world, if some of the structural reforms happen and the fees come down to a degree, that would alleviate the need for collective bargaining.
“In particular, a mandate on least cost routing and splitting debit and credit merchant fees” Foukkare said.
“It’s the opportunity for smaller businesses to come together under the ACCC for a better deal” Mark McKenzie, CEO of the Australasian Convenience and Petroleum Marketers Association said.
“For a small business in this space, it’s a very complicated system. This is an opportunity to negotiate a position that brings benefit to all of them.”
The effective elimination of interchange on debit payments is also prominent in the IPF reform plan.
The IPF is calling for a “cap on interchange on domestic debit <$50 at $0.00 and >$50 at $0.01, and scheme fees at 15c.”
But why stop there?
The IPF 10-point plan includes recommendations to:
- Mandate least cost routing for debit cards on all platforms, including mobile and online for every transaction, with savings passed onto merchants by acquirers with transparency
2. Prohibit fixed, blended and bundled pricing
3. Separate credit from debit surcharging
4. Harmonise all Point-of-Sale debit fees, including on mobile
5. Cap interchange on domestic debit <$50 at $0 and >$50 at $0.01, and scheme fees at 15c. Publish wholesale cost of acceptance for debit cards, including scheme fees quarterly.
6. Mandate opt-in merchant surcharging for debit on terminals
7. All card fees, including scheme fees, are transparent and published on the RBA website in real time, in plain English
8. Provide SMEs permission to collectively bargain on payments fees
9. Ensure any new retail debit platforms that replace debit cards are regulated and low cost
10. Recognise debit is the new cash.