decides against increasing transparency in this way, public companies (over a certain size to exclude small business) should be required to report annually on the total amount collected in card surcharges and total amount paid in merchant service fees. This will allow a more transparent evaluation of the gap between average merchant fees and total surcharges. This measure will assist any regulator responsible for assessing the reasonableness of surcharges and provide consumers with transparency about surcharge collection. Routing CHOICE strongly opposes the proposal to allow merchants to route payments over their preferred network. CHOICE’s understanding of this proposal, as described by merchant submissions to the Financial System Inquiry consultations, is that it would remove consumer choice. This paper does not consider the impact of merchant routing on consumers, either on their personal finances or in their role as agents with the ability to drive change and increase competitive pressure in any market. There are practical differences with payment systems for consumers including different surcharges at the point of sale, different security guarantees in case of fraud and the ability to use additional features such as withdrawing cash at a checkout. The most prominent difference is when the payment is deducted from a consumer’s bank account. Eftpos payments are deducted automatically while Visa and MasterCard debit payments can take several days before the payment is finally processed. If the merchant routing proposal goes ahead, businesses could override consumers’ decisions about how to manage their personal finances. The most effective way of addressing the issue of different costs a merchant incurs to accept different payment types is to continue the current system which allows a merchant to send price signals to consumers through surcharging based on the reasonable costs of accepting a payment. Should a merchant find a payment option too expensive they are currently able to refuse to accept that payment type or charge a reasonable surcharge, rather than offer consumers one option and deliver another. Decision to allow merchant routing potentially unreasonable We believe that any decision to merchant routing could be considered unreasonable as it fails to consider that different payment systems provide different services with different features, and thus cannot be readily swapped without an impact on the service a consumer receives.
decides against increasing transparency in this way, public companies (over a certain size to exclude small business) should be required to report annually on the total amount collected in card surcharges and total amount paid in merchant service fees. This will allow a more transparent evaluation of the gap between average merchant fees and total surcharges. This measure will assist any regulator responsible for assessing the reasonableness of surcharges and provide consumers with transparency about surcharge collection. Routing CHOICE strongly opposes the proposal to allow merchants to route payments over their preferred network. CHOICE’s understanding of this proposal, as described by merchant submissions to the Financial System Inquiry consultations, is that it would remove consumer choice. This paper does not consider the impact of merchant routing on consumers, either on their personal finances or in their role as agents with the ability to drive change and increase competitive pressure in any market. There are practical differences with payment systems for consumers including different surcharges at the point of sale, different security guarantees in case of fraud and the ability to use additional features such as withdrawing cash at a checkout. The most prominent difference is when the payment is deducted from a consumer’s bank account. Eftpos payments are deducted automatically while Visa and MasterCard debit payments can take several days before the payment is finally processed. If the merchant routing proposal goes ahead, businesses could override consumers’ decisions about how to manage their personal finances. The most effective way of addressing the issue of different costs a merchant incurs to accept different payment types is to continue the current system which allows a merchant to send price signals to consumers through surcharging based on the reasonable costs of accepting a payment. Should a merchant find a payment option too expensive they are currently able to refuse to accept that payment type or charge a reasonable surcharge, rather than offer consumers one option and deliver another. Decision to allow merchant routing potentially unreasonable We believe that any decision to merchant routing could be considered unreasonable as it fails to consider that different payment systems provide different services with different features, and thus cannot be readily swapped without an impact on the service a consumer receives.
choice.docx