Coronavirus: Retailers rejecting cash ‘must not surcharge customers’, says RBA

Retailers rejecting cash could be breaching Australia’s surcharging payment regulations.

A Westpac spokesman said the bank planned to refund all merchant terminal fees to businesses over the next three months.

Retailers rejecting cash payments during the coronavirus pandemic could be breaching Australia’s surcharging payment regulations.

Businesses choosing not to take cash for health and safety reasons due to COVID-19, are potentially disobeying payment polices set by the Reserve Bank of Australia, which stipulates consumers must have the option of making a payment that does not attract a surcharge.

According to the RBA, cash is traditionally perceived to be the non-surcharge payment option, while certain debit and credit cards can attract a surcharge fee, due to costs incurred to the merchant from the terminal and card provider.

Merchants usually place surcharges on Visa and Mastercard cards, but debit card transactions through the domestic eftpos network are not surcharged as the payment method attracts lower fees.

A fee-free eftpos transaction can be conducted when the customer inserts their card in a payment terminal and presses either cheque (CHQ) or savings (SAV).

Speaking to The Australian, RBA head of payments policy Tony Richards said despite the “unprecedented” nature of the crisis, retail payments should follow protocol under the existing policy.

“The Bank would highlight that under the current framework, if a merchant is unwilling to accept cash, it should allow for some other form of payment that is not surcharged,” Mr Richards said.

“That is, a merchant cannot surcharge all the payment methods that it accepts.”

The surcharging framework, implemented in 2016 by the RBA and the Australian Competition and Consumer Commission, notes that merchants are required on an annual basis to ensure surcharges do not exceed the cost of card acceptance.

However, the current framework does not require businesses to revise surcharges more frequently, if its respective payment provider changes the cost of fees.

Terminal providers Commonwealth Bank and Westpac have both waived merchant fees to businesses feeling the financial impact of the virus.

CBA said it has automatically waived terminal fees to 70,000 small businesses across Australia for the next three months. A Westpac spokesman said the bank planned to refund all merchant terminal fees to businesses over the next three months.

The RBA said businesses benefiting from such support packages should actively attempt to drop fees if associated costs of accepting a card payment diminishes.

“In a situation where a merchant’s cost of card acceptance has fallen to zero and the merchant has the ability to reprogram its terminal and revise its surcharge, it would certainly seem desirable that this saving be passed on to the consumers,” Mr Richards said.

It is understood that the RBA’s review of retail payments regulation is considering implementing a rule which would force merchants to always offer an electronic payment option that does not attract a surcharge.

Mr Richards said the current environment of businesses not taking cash due to coronavirus would strengthen the case for such a regulatory change.

“The RBA recognises the longer-term trend decline in the use of cash in everyday transactions and that some consumers are increasingly carrying little or no cash,” he said.

The review expected to be completed in late 2020 has been postponed due to COVID-19 and is now set to be finalised in 2021.

Electronic payment provider company Tyro has also been contacted for comment.