The Reserve Bank of Australia (RBA) is looking into the possibility of a reduction in the cost of electronic payments for both merchants and consumers.
The RBA could intervene to help merchants make electronic payments cheaper
According to a speech delivered by assistant governor Michele Bullock, the central bank could use its regulatory abilities to improve the payment plans offered to merchants in the wake of a drop in ATM and cash usage.
Bullock says that ATM withdrawals in Australia had fallen by 30% from March 2020, and by more than 40% when compared to the same period in 2019.
“The cost of payments for merchants is an issue that the Bank has been focused on since it was given responsibility for efficiency and competition in the payments system in 1998,” says Bullock.
“As cash use declines, it is even more important than ever that we ensure competitive pressure remains on the costs of electronic payments to merchants.”
The RBA governor states that while it had not mandated that acquirers explicitly offer least-cost routing to their merchant customers, it is an option that is under review.
The central bank is in consultation with the industry, while the matter is under consideration.
However, Bullock concedes that if market forces are not generating competition to lower the cost of debit card payments, “we may need to consider lowering the benchmarks that serve as a cap on average interchange fees.”
Further in her speech, Bullock outlined how the COVID-19 pandemic may have spelled the end of cheques as a payment method in Australia.
“One option that is actively being considered by the industry is closure of the cheque system. With electronic conveyancing increasingly the norm, a major use of financial institution cheques is being phased out.”
