Retailers support Murray recommendation for payment and credit card systems including surcharging

THE Australian Retailers Association (ARA) said retailers support the recommendation made by the Federal Government’s Financial Systems Inquiry (FSI) Murray Report to ensure credit card payment schemes fall under the same guidance as the two major card schemes for co-branded cards.

ARA Executive Director, and chair of Australian Merchant Payments Forum (AMPF), Russell Zimmerman said the three party schemes (where banks issue co-branded cards allowing systems like Diners and AMEX to avoid rules) are significantly hitting retailers’ bottom lines and this recommendation will benefit retailers and consumers.

The ARA also supports the tiered surcharging proposal where low cost payment systems, which could include three party credit card schemes will see surcharging removed but still allows a price indicator for higher cost schemes allowing retailers and consumers choice.

"The ARA and AMPF firmly believes that there is currently an unequal playing field with some card systems able to decide their own pricing model and choose if they wish to allow surcharging by the merchant. However, both Visa and MasterCard are regulated to ensure that merchants are rightfully not charged more than a reasonable Merchant Service Fee.

"As pointed out in the report proposals for surcharging standards should make surcharging standards simpler and more accurate, while encouraging system providers that are not subject to interchange fee standards to reduce their cost.

“All participants in the payments system must be treated fairly and equally. Regulations need to be broadened to include both three-party schemes (AMEX and Diners) alongside the currently-regulated four-party schemes (Visa and MasterCard).

“In principle, retailers do not believe in surcharging and in the vast majority of cases they don’t for the regulated low-cost two major card schemes. Where they do need to surcharge is on the unregulated high-cost schemes which then gives the consumer the choice of whether they use a high-cost unregulated surcharged card or a no-cost regulated card,” Mr Zimmerman said.

The ARA is pleased to see that many of our submission recommendations have been included in the report and that both the small and large retailers who put input into this process have been listened to.
 
Key points in the ARA’s FSI submission:

• Rule changes are required in relation to co-branded or companion cards issued by financial institutions and must include both three and four party schemes.

• Merchants should have the choice of routing for all payment transactions including, but not limited to, AMEX, scheme debit and contactless transactions, allowing the lowest transaction costs possible.

• As internet transactions increase (currently at 6 percent of total retail – expected to grow to 12 percent of retail sales by 2020) and technology changes rapidly from cards to mobile devices to new POS equipment, merchants will need to invest heavily in new technology. Merchants must be consulted as changes to the payment system occur as merchants are an integral part of the payments system.

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Since 1903, the Australian Retailers Association (ARA) has been the peak industry body representing Australia’s $265 billion retail sector, which employs over 1.2 million people. The ARA ensures retail success by informing, protecting, advocating, educating and saving money for its 5,000 independent and national retail members throughout Australia.

Visit www.retail.org.au or call 1300 368 041.

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