Wednesday, April 24, 2024

Small businesses are wasting revenue in merchant fees

Many of Australia’s 2.1 million small businesses, says a specialist payment consulting firm, are wasting revenue by not investigating the best payment service providers. Nor are they making the most of least-cost routing.

According to Payment Consulting Network, small retailers often don’t have time to research or have the money to appoint specialist consultants to determine the best option when it comes to payment service providers.

These retailers, says the firm, aren’t aware of least-cost routing or other opportunities available in the payment landscape.

Merchant Pricing Hub relaunches 

The warning comes as Payments Consulting Network relaunches its Merchant Pricing Hub with the addition of least-cost routing information to its platform of “powerful” research and tools. This includes a comparison calculator, which has been developed by the firm over its seven years of operations.

Merchant payments and least-cost routing 

Payments Consulting Network Research Director Catherine Batch says merchants were experiencing significant margin pressure as a result of transaction fees from credit and debit card payments.

“The stress of merchant fees on businesses has been exacerbated by the rise of contactless or tap-and-go transaction payment solutions, as presently, the transaction is routed through international networks even if the card used is also attached to the domestic eftpos network,” she said.

“Unless the merchant has opted for least-cost routing, where a card transaction is automatically routed to the lowest cost network of the networks attached to it, they could be paying close to double or more than they should on transactions.

“Take for example the average $50 transaction. If the Visa and Mastercard merchant service fee is one per cent and the eftpos merchant service fee is 15 cents per transaction, all eligible transactions routed to Visa and Mastercard would be $0.50, while if routed through eftpos the fee would be about one third of the price.”

With Merchant Pricing Hub, all the homework has been done for retailers. They are provided with an explanation on the products available for merchant payments, the benefits of each, considerations and where least-cost routing is available.

The company has produced an easy to read guide on least-cost routing, which is available to download for free. The guide plus free access to the updated Merchant Pricing Hub is available here.

CBA enables Merchant Choice Routing 

This week, the Commonwealth Bank has enabled Merchant Choice Routing (MCR) for businesses to select which network to use when processing contactless payments made with multi-network debit cards (Mastercard and Visa).

Businesses, says the bank, will be able to choose any combination of payment routing choices.

MCR is an optional feature for CBA and Bankwest merchant customers which, when enabled, is said to allow contactless payments made with multi-network debit cards to be processed through either the domestic eftpos network or the multi-network debit card schemes.

“MCR gives businesses the flexibility to choose which network and transaction threshold to set depending on their own business transaction volumes and card mix,” CBA General Manager, Commerce Solutions Sam Itzcovitz said.

“It’s another example of our commitment to delivering simpler, easier payment experiences and that includes giving our business customers more choice and control in how they receive payments.”

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