Merchants are paying significantly less to accept a card payment on the Eftpos network than on either Mastercard or Visa, the Payments System Board says.
The Reserve Bank released the annual report of the Payments System Board yesterday, reporting that, while the cost of accepting card payments varies based on the size of the merchant, the cost of acceptance was on average 37 basis points lower for Eftpos than for the international schemes.
American Express and UnionPay costs were “significantly higher” than those of the other schemes.
In the 2019/20 financial year the average merchant fee for debit card transactions on Mastercard and Visa debit fell 6 bps to 0.46 per cent.
The Payments System Board said: “The latest decline was consistent with small reductions in the schemes’ weighted average interchange fees on debit transactions, as they responded to competitive pressures created by the availability of least cost routing.”
The average merchant fee for credit card transactions on Mastercard and Visa fell 2 bps to 0.89 per cent.
The average merchant fee for eftpos remained steady at 0.27 per cent.
The average fee for American Express was 1.36 per cent and UnionPay costs were around the same level.
There were some merchants for which eftpos was not the lowest cost debt scheme. Visa and Mastercard pricing is usually percentage based, while eftpos is typically cents per transaction.
Business with low average transaction values, such as coffee shops, may face higher eftpos costs.
The Payments System Board said holding down the cost of card payment remained a priority. It is encouraging the adoption of least cost routing for contactless payments.
It is concerned that, while most of the major acquirers have introduced LCR “in some form”, take-up among merchants has been low.