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DIGITAL PAYMENTS TAKE OVER The advent of new technology has allowed consumers simply and easily to pay with the tap of a card, rather than having to carry notes and coins. By National Retail Association CEO Dominique Lamb. A ccording to the latest report from fintech company FIS, Australia is set to soon have only two per cent of transactions take place with cash. The pandemic has only accelerated this phenomenon. Governments have encouraged (and in some instances enforced) payments to be made electronically, to prevent the spread of the coronavirus. Also, the arrival of buy-now-pay-later platforms, essentially lay-by in reverse, has given shoppers of all ages further incentive to ditch cash and coins. Electronic payments certainly offer greater convenience for consumers. Not only does this technology fast- track the transaction time, but it also means that shoppers aren’t having to hunt down an ATM if their wallet or purse is empty. However, electronic payment methods have also come with a cost in the form of merchant fees. These expenses can be significant, particularly if they’re routed through international networks, and often end up being passed on to the consumer via higher prices. Recently, BPAY, eftpos and New Payments Platforms Australia applied to the Australian ACCC for a proposed merger between the three entities. The amalgamated group would be known as NewCo, with the promise of innovating the payments space and fostering greater collaboration. However, the NRA doesn’t view this proposed merger as being beneficial overall – for two key reasons. First, we’re concerned that this appears to be a marriage between big banks and large retailers, thereby locking out small business from the decision-making table. There are currently 2.3 million small businesses in Australia (including many of you reading this) that play an essential role in the Australian economy. The setting up of a small-business subcommittee to sit beneath the merged entity has been mooted, but we believe this isn’t good enough. "Recently, BPAY, eftpos and New Payments Platforms Australia applied to the Australian ACCC for a proposed merger between the three entities." If there was a genuine desire to give smaller operators a meaningful voice, then it would be at the top table and not as a second-rate entity with no real influence. Second, under the proposed structure, there’s no appetite for NewCo to pursue reforms to least-cost routing (LCR) access. LCR can reduce transaction costs placed on the shoulders of businesses by as much as 40 per cent, a significant reduction at any time and even more so in the current climate. The way merchant fees often operate lacks transparency, and they’re difficult to calculate. In some instances, the fees are part of a bundle linked to other metrics such as sales volumes. This makes it next to impossible for a humble small-business owner to reliably calculate the true cost of these expenses to their business. Increasing the availability of LCR should be a priority. Unfortunately, this proposed amalgamation wouldn’t adequately tackle this issue. The path to lower merchant fees would almost certainly be achieved through enhanced competition. NewCo would go in the opposite direction by reducing the number of players in the market while making it more difficult for new entries. Greater competition is the best mechanism to place downward pressure on merchant fees, thereby ultimately giving consumers a lower bill at the check-out. INDUSTRY INSIGHT About Dominique Lamb Dominique Lamb is the CEO of the National Retail Association and has extensive experience providing industrial relations and employment law advice to a range of small, medium-size and large businesses across a range of industries. The National Retail Association The National Retail Association (NRA) is Australia’s largest and most diverse industry association. As a not-for-profit organisation, its members range from small, family owned and operated businesses to leading national brands. MAY/JUN, 2021 CONVENIENCE WORLD 15