Cheaper card processing comes to e-commerce

Heather McIlvaine

16th May 2019

The Reserve Bank of Australia has been pressuring banks to give businesses and customers more choice about how card payments are processed at checkout for the past year. The move could save businesses millions of dollars in fees. And now, e-commerce businesses can get in on the act.

Eftpos, Australia’s debit card payment system, has partnered with business software provider MYOB to allow businesses to process online card payments through eftpos, rather than Visa or Mastercard.

The capability will be rolled out in stages, with consumer payments to be the final stage.

More competition may lead to lower fees

While the processing fees may vary depending on the business, eftpos is sometimes cheaper than the two major card schemes. And its presence in the market increases competition, which can help keep fees down across the board.

“With more than 51 million eftpos-enabled cards, eftpos offers real-time e-commerce capability to almost every Australian with a bank account,” Stephen Benton, eftpos CEO, said in a statement.

“This means merchants and consumers can get their money quickly while merchants may also benefit from lower costs which they can pass on to consumers through lower surcharges.”

A 2018 study by Tyro found that its business customers saved over $1.5 million in merchant processing fees in the first eight months after it rolled out its least-cost routing option, Tap & Save.

Least-cost routing allows payments to be processed through whichever network costs the least to accept – whether that is Eftpos or Visa or Mastercard – rather than forcing businesses to choose one network for all transactions.

This benefits retailers that have a wide range of basket sizes, such as service stations, in particular.

Andrew Birch, MYOB’s chief operating officer, said MYOB’s core purpose is to help Australian businesses get paid faster, and that the partnership with eftpos would help with this.

“We know payments and cashflow are one of the biggest headaches for businesses. Providing greater freedom to accept more payment methods, such as eftpos, means our customers’ payees have more options to pay, helping them keep on top of their cashflow,” Birch said.

MYOB and eftpos noted that in same cases funds may not be available in real time as the bank or merchant may hold the funds for risk management purposes.