step in to address these concerns, with Treasurer Josh Frydenberg pressing the RBA to force commercial banks to offer cheaper debit card services on the tap-and-go payments provided to customers by small businesses. In a letter written to the RBA Payments Board, the minister also called on the central bank to mandate the issuance of dual-network debit cards (DNDCs) with eftpos capability by both major and medium-sized banks, in order to avoid typically higher fees charged by Visa and MasterCard.
“The Morrison government is committed to lowering costs for small business through the implementation of least-cost routing in the debit card market,” the Treasurer said in a statement. “With a highly competitive marketplace, it’s more important than ever that small businesses and consumers have access to the best possible payment option at the point of sale.”
Previously, the RBA acknowledged that apart from their larger investment in cyber security, the US card giants are more attractive for banks owing to the higher fees which are shared between the two parties. “Some issuers may also be choosing SNDCs (single network debit cards) in response to financial incentives from the debit schemes, including higher interchange fees on SNDC transactions,” the apex bank said in a discussion paper in May.
Nevertheless, the government is hoping to go beyond in-store payments, and is considering the possibility of extending the DNDCs mandate to online purchases. “As part of our consultation on the Farrell Review into Australia’s Payment System, the government will consider changes that may be necessary to promote least-cost routing more broadly, particularly in an online and contactless environment,” Frydenberg noted.
