The National Retail Association (NRA) has supported Treasurer Josh Frydenberg's calls for the Reserve Bank of Australia (RBA) to support small business on debit card fees.
The Treasurer joined a cohort of business leaders urging the RBA to mandate 'least cost routing' when it comes to merchant fees from international providers.
"In layman’s terms, least cost routing means providing small business access to cheaper domestic debit payments schemes such as eftpos, rather than requiring transactions fees to only go through the far more expensive international providers," NRA CEO Dominique Lamb said.
"Mandating least cost routing would provide enormous relief for small retailers at a time when many continue to battle lockdowns and other restrictions," she said.
The RBA's 2019 Consumer Payment Behaviour survey found that 63% of Australians used a card to make payments, compared to 27% who used cash - down from 37% of consumers who used cash in 2016.
Of those using cards, debit cards were the preferred method, with the survey finding 44% used this method, while 19% used a credit or charge card.
The RBA research revealed that around half of all in-person payments were made by ‘tapping’ a debit or credit card on a card terminal in 2019.
A further 5% of in-person payments were made by tapping or waving a smartphone or other payment-enabled mobile device (e.g. watch) in front of a card terminal rather than using a physical (plastic) card.
Overall, 83% of point-of-sale card transactions were contactless, initiated by tapping a card or mobile device.
Lamb added that COVID has driven a bigger shift away from cash payments.
"COVID has further accelerated the trend away from cash to digital payments.
"The current payments system has failed to keep pace with changes in consumer behaviour, with the overwhelming majority now either using tap-and-go or mobile methods for transactions.
"With COVID continuing to wreak havoc and cash becoming even less frequent, providing cheaper options for digital transactions is not something that retailers can afford to wait years to occur.
"Retailers across the country strongly urge the RBA to take on board the unequivocal stance made by the Treasurer and enact the necessary reforms to the debit payments system.
"The RBA can no longer ignore the myriad voices from industry and government demanding changes that update the payments system for the modern digital world," she said.