Finance Consumer ‘Tap and no’: Small businesses buckle under transaction costs

‘Tap and no’: Small businesses buckle under transaction costs

tap and go small business
The small business lobby wants change in the way firms are charged fees for new payment methods. Photo: Getty
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Grocery and fuel sellers are increasingly being slugged with higher transaction costs as “tap and go” payments surge, a small business summit has been told.

Many consumers are unaware that buying a coffee with a mobile phone might make it harder for their favourite cafe or servo to remain in business because of steep transaction costs.

“Transaction costs are accelerating more than any other,” Mark McKenzie, chief executive of the Australasian Convenience and Petroleum Marketers Association said on Wednesday.

Merchants’ fee costs have become an essential service, on a par with electricity bills in their impact on a business, as leaps in technology run ahead of legacy banking systems, Mr McKenzie told the Council of Small Business Organisations Australia payments summit.

Payments expert Robbie MacDiarmid said small businesses were being slugged $67 million a month in excessive fees due to routing of payments.

COSBOA members want every transaction to be processed on a “least cost route”, despite legacy issues for banks.

The issue arises because the merchants are the customer of the service but supplier decides how they get that service – and that is innately wrong, Mr McKenzie said.

COSBOA chief executive Alexi Boyd said business owners were often also unaware they were copping the maximum fee for the transaction.

Nor would a consumer necessarily know that paying through a digital wallet such as Apple Pay or Google Pay or a “tap and go” payment with their phone meant the transaction attracts fees were up to six times more, she said.

“They (business owners) don’t have the luxury of a very high net profit on each transaction,” Ms Boyd said.

“In some cases they’re just trying desperately to keep their head above water.”

But nor did retailers want to remove choice from customers.

“We’ve got the evolution of tech moving so fast that it’s just too difficult to put a noose around it and actually try to wrangle it into something that makes sense for small businesses,” Ms Boyd said.

“As small businesses, we’re saying enough is enough.”