RBA reveals fee gouging on tap and go payments continues to skyrocket
As cash transactions seem to be becoming a thing of the past, the ‘tap and go’ trend on debit and credit cards continues to grow, bringing with it some heavy fees that are hurting small businesses.
In its yearly bank fee survey, the Reserve Bank has revealed that the banking fee income made from businesses that accept tap and go payments has grown massively in the past few years.
The overall fee income from businesses rose by 3% in 2018, the main driver of the spike being from merchant service fees on card transactions.
Meanwhile the amount made from ATM fees fell dramatically.
Over the last couple of years many banks killed ATM fees on their cards, but the research by the RBA also found that there has been a significant decline in ATM withdrawals as people are opting for electronic payment options over cash.
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Aussie customers’ growing obsession with the convenience of tap and go is hitting small businesses hard as they try to keep up with the large fees they pay on card transactions.
Similarly, with many banks (and even more recently a supermarket) offering mobile payments options on their cards, like Apple Pay, Samsung Pay and Google Pay, it’s never been easier for customers to tap and go on purchases.
The RBA is currently pushing to help low-cost payment alternatives grow, like eftpos, so both customers and businesses owners can have other options to the more expensive Mastercard PayPass and Visa Paywave.
They also aim to reform the way in which banks charge merchants on tap and go transactions, as currently it is up to the bank which often charge different businesses different fees.
“Contactless payments have become the main method of paying for shoppers, so it’s crucial that we establish a fee structure that is regulated properly,” Mozo’s Banking Expert, Peter Marshall said.
“It’s important that the system is fair for both businesses and customers, so smaller businesses aren’t left struggling to keep up with the large fees that come with accepting tap and go payments.”
Where are Aussies coughing up the most in credit card fees?
Recent research by the RBA confirmed that credit cards continue to be the biggest single source of banks income from households (41%) across the country.
Despite overall fee income from households decreasing by 7% in 2018, credit card fees increased over the course of the year.
However growth was slower than previous financial years, as there was a decline in the income made from foreign currency conversion fees and annual fees on non-rewards credit cards.
But Aussies continue to pay the most in late payment penalty fees and annual fees on cards connected to rewards programs.
Do you feel like you are paying too much in credit card fees? Head over to our credit card comparison table to see if your card measures up with other providers.