Australian Payments Plus (AP+) has announced debit card changes aimed at lowering the cost of payments in Australia.

The changes include the rollout of Merchant Choice Routing (MCR) on transactions made via mobile wallets and lower interchange rates for some eligible small businesses, but Independent Payments Forum Australia (IPF) believe there is still a long way to go to have any meaningful impact.

Warwick Ponder, Co-Founder of IPF, said the announcement is a positive step which begins to address the massive disparity between debit card fees charged to small businesses and their customers compared to big business.

“To succeed it will need commitment from both the industry and the regulator. Lower fees have been available for some time, what we really need to see is a commitment to real change that leads to lower costs for everyday Australians. This is currently impeded by of issues such as fixed pricing plans which don’t return wholesale pricing benefits to small businesses.

“We expect to see a lot of announcements and posturing ahead of the RBA’s up-coming review into card fees and surcharging, but that needs to equate to real change and lower fees on the ground.”

AP+ said MCR will enable merchants to have the choice to process payments via the lower cost eftpos network when a consumer pays using an eligible card in a mobile network, dependent on handset manufacturer.

Bradford Kelly, Co-Founder of IPF, said the announcement proved what the IPF and others have said for a long time about routing transactions on mobile phones, in the face of aggressive industry push back and denial. 

“Least Cost Routing on mobile is possible and should have started years ago as it has been in Europe and the US. Unfortunately, small businesses currently pay much higher fees for mobile transactions and are likely to do so for years to come, even though these transactions operate on the same payment rails, using the same card and access the customers own money from the very same bank account.

“It is likely that the benefits of least cost routing on mobile will not be seen in full for three years, and those benefits will not be passed on to merchants under the current pricing plans. Instead, they may simply boost profit margins for banks and other payment providers.”

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