The Council of Small Business Organisations Australia is launching a campaign to demonstrate the real savings experienced by businesses that have implemented least cost routing (LCR), a feature on eftpos machines that ensures the business is always charged the lowest cost for accepting debit card payments, whether the customer taps their card, inserts it, pays online, or taps their phone.
“COSBOA can demonstrate the obstacles faced by small business owners who ask their banks to implement LCR and the additional cost savings a business can achieve by implementing LCR through real life examples. Especially in this time of supporting small business, government needs to make least cost routing mandatory.”
The campaign launch is accompanied by the release of an updated position paper summarising COSBOA’s advocacy position on LCR.
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.”
The first case study of the campaign is the independent Tasmanian supermarket group, Hill Street Grocer.
Tasmania’s Hill Street Grocer has a passion for fresh produce and delicious food. Initially known as Hobart’s best little corner shop, it now consists of 10 stores throughout the state. With the help of Payments Consulting Network, the family-owned business saved $190,000 in the first year of implementing least cost routing. That’s a 33% reduction in merchant fees. CEO Nick Nikitaras said that they could not have achieved such a fee savings outcome on their own.