In recent years, ACAPMA has received reports of significant increases in the cost of fees charged by banks to process electronic transactions (debit and credit) of fuel businesses. While some of this increase can be explained by the increasing consumer use of debit cards instead of cash – a trend that has accelerated during COVID times – careful analysis reveals that much of the increase is due to the unit cost of debit transactions having increased well above CPI in recent years.

“Normally, you would expect that an increase in the volume se of a service or product will lower the unit costs of that product or services but, in the case of debit fees paid by businesses to Australia’s big banks, the unit cost has increased at an alarming rate due to a lack of transparency and the absence of suitable regulatory controls on the merchant services market in Australia”, said ACAPMA CEO Mark McKenzie.

Regular readers of ACAPMAg will know that ACAPMA has been pursuing this issue for more than 6 years with only limited success. In a battle that is reminiscent of a ‘David & Goliath’ struggle – and despite a major review of the Merchant Fee Regulations in Australia (and an ACCC Review of a merger of payment services providers last year) – the big banks and credit card companies have been successful in thwarting calls for meaningful regulatory change.

“A general lack of transparency coupled with an increasingly complex market has meant that fuel retail businesses (and indeed all retail businesses) are paying Australia’s big banks and their global credit card companies more for debit card payments than they need to”, said Mark

The decision to route debit payments is made by the banks who programme the POS terminal, generally without the knowledge of the businesses. Given the banks earn more money from the higher cost route, it isn’t hard to guess which route they use as the default setting. In fact, the route is generally only changed if the business is aware of this fact and then approaches an accommodating bank to have the setting changed to the Eftpos route.

“A typical fuel transaction of $70 attracts an 18cent fee via the low cost Eftpos route and 32cents via the higher cost International Credit Card route”, said Mark.

“This may all sound like ‘mere cents’ but for an average suburban servo, this cost equates to an additional cost of $12,500 per year – all of which comes straight off the bottom line with no benefit to the business whatsoever – despite the fact that the payment could be processed in just the same manner via the cheaper route”, said Mark.

The lack of any meaningful progress on this issue has resulted in the formation of a national coalition of industry bodies that has launched a national campaign in advance of the 2022 Federal Election.

Led by the Council of Small Business Organisations of Australia (COSBOA), ten (10) national industry bodies have banded together to support a national campaign for immediate changes to Australia’s merchant fee regulations – to require all merchant services providers (i.e. Banks) to introduce LCR as the default setting on payment terminals across the country.

Apart from ACAPMA, the other industry bodies that have joined this national campaign include:

  • Australian Association of Convenience Stores (AACS)
  • Australian Chamber of Commerce and Industry (ACCI)
  • Australian Lotteries and Newsagents Association (ALNA)
  • Australian Retailers Association (ARA)
  • Franchise Council of Australia (FCA)
  • Master Grocers Association (MGA)
  • National Retail Association (NRA)
  • Pharmacy Guild of Australia (PGA)
  • Restaurant and Catering Industry Association (RCA).

COSBOA CEO Alexi Boyd said: “Debit card payments are automatically being processed through the more expensive international Visa and Mastercard networks instead of the cheaper domestic network, Eftpos. This adds up to more than $800 million annually in unjust fees for Australian businesses.”

Ms Boyd continued “Our campaign will get down to the granular level and show the faces behind this figure of $800 million. It will show what individual businesses – businesses including bespoke supermarkets, shoe shops and newsagencies – have saved thanks to least cost routing.”

“We understand it can sometimes be hard to conceptualise what these figures mean for small businesses operating on extremely tight margins – that’s why our campaign will also highlight what small businesses could achieve with these savings.”

“While a saving of $25,000 a year may just be a drop in the ocean for a big bank, for a small retailer it can mean employing a part-time staff member – a significant increase for businesses with 2-19 staff. It could mean upgrading ageing assets or getting a new fit-out. It could mean finally creating an online shopping portal, purchasing a CRM, investing in cyber security – the list is endless.”

Ms Boyd concluded “At a time of great economic uncertainty and huge technological shifts in how we pay for things, there’s no justification for small businesses being forced to pay more than they should when it comes to accepting debit card payments.

“It’s completely unfair. Least Cost Routing needs to be mandated to give small businesses a fair go at growing their way out of COVID-19 and staying competitive in this new, highly-digitised world.”

Launched today (Friday 17 February 2022), the campaign is supported by an information document that describes the issue, the work done to date and provides a series of case studies about the potential savings that can be realised as result of Least Cost Routing COSBOA launches faces behind fairer merchant fees campaign_

Members wishing to find out more about the campaign and ACAPMA’s participating in same, should email ACAPMA at