RBA Warns Banks on LCR as A$1 Billion in Card Surcharges Lost
(4 March 2024 – Australia) Australian consumers are losing almost a billion dollars per annum (pa) in card surcharges which could be cut significantly with least-cost routing (LCR).
The Reserve Bank of Australia (RBA) reveals Australians are losing A$960 million a year in surcharges when they pay with cards instead of cash. Larger firms rarely surcharge because they can absorb payment costs however SMEs who pass on payment costs are frustrated by elevated inflation and rising costs.
LCR is an RBA scheme aiming to cut card payment processing fees for businesses to pass on saving to shoppers. RBA Governor Michele Bullock has threatened to mandate LCR by the Q2 2024 if the industry does not meet the target of 80 percent by then.
"Businesses are suffering a cost of doing business crisis. Small businesses in Australia, of which there are 2.5 million, are really struggling to turn a break even, let alone turn a profit” stated CEO of the Council of Small Business Organisations Australia (COSBOA) Luke Achterstraat.
“We really need the payment providers and the banks to really promote these opportunities for least-cost routing, make it as easy as possible to opt-in.”
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