THE Australian Retailers Association (ARA) says retailers support the Federal Government’s Financial System Inquiry (FSI) recommendations to ensure excessive credit card surcharging is legislated and cease exorbitant merchant fees by unregulated payment systems through regulation.

ARA Executive Director and Chair of the Australian Merchant Payments Forum (AMPF), Russell Zimmerman, said the recommendation will benefit both retailers and consumers, allowing retailers to reduce surcharging on high cost payment systems.

The ARA believes there are flaws in the current system, the biggest of which being the lack of regulation of the plethora of high cost and new payment systems coming into the market.

American Express co-branded cards, Diners Club, China Union Pay, and Bitcoin, are not regulated, and all carry greater costs for retailers and consumers alike.

It costs retailers twice as much to accept these unregulated cards as Visa and MasterCard, which is why so many retailers are forced to pass costs onto customers via a surcharge.

As the banks are able to charge more for these cards, they are issuing more of them, placing pressure on Australian retailers to accept unregulated cards.

“The devil will be in the detail. Where retailers do surcharge it is often a blended rate, including the high cost payment systems to simplify the payment for the customer,” Mr Zimmerman said.

“Will retailers need to break out low cost cards they don’t usually surcharge on such as Visa and MasterCard and surcharge the high cost systems separately, or will there be a blended rate for ease of use by customers?

“The ARA and AMPF firmly believes that there is an unequal playing field, with some card systems able to decide their own pricing model and choose if they wish to allow surcharging by the merchant.

“Both Visa and MasterCard are regulated to ensure that merchants are rightfully not charged more than a reasonable Merchant Service Fee, and we believe this should be the case for all cards.”

As noted in the Murray report, proposals for surcharging standards should make surcharging standards simpler and more accurate, while encouraging system providers that are not subject to interchange fee standards to reduce their cost.

“All participants in the payments system must be treated fairly and equally. Legislation and regulation needs to include three party schemes (where banks issue co-branded cards allowing systems like Diners Club and American Express to avoid rules), which are significantly hitting retailers’ bottom lines, alongside the currently regulated four party schemes (Visa and MasterCard).

“In principle, retailers do not believe in surcharging, and in the vast majority of cases they don’t for the regulated low cost three major card schemes (including eftpos).

“Where they do need to surcharge is on the unregulated high cost schemes, which gives the consumer the choice of whether they use a high cost, unregulated, surcharged card,a or a no cost regulated card,” Mr Zimmerman said.

The ARA is pleased to see that many of our submission recommendations have been included in the Government’s final recommendations and that both the small and large retailers that provided input into this process have been heard.

Key points in the ARA’s recommendations are:

Surcharging

• Principles-based surcharging, where there is no surcharging allowed for low cost systems (eftpos and debit) and businesses are permitted to apply a surcharge which reflects the cost of acceptance for credit
• To ensure that there is no cross subsidisation, blended surcharging not permitted
• ACCC given powers to enforce this policy, particularly excessive surcharging. Consumers able to report excessive surcharging to ACCC.

Level Playing Field

• Any regulation must apply equally to all payments systems including American Express, Diners Club, Union Pay, JCB, PayPal
• A threshold set at 1.5 percent of retail payment transactions marketshare before regulation is applied
• Regulation to capture new forms of payment systems under this model as they emerge.

Interchange

• A significant and meaningful reduction in the disparity which currently exists between large and small merchants
• A defined range of interchange rates applied to industries and products
• An annual reset to ensure regular compliance with a weighted average of 50 basis points for interchange rates
• Allowance of ‘special rates’ for a defined period of time, to allow schemes to incentivise new technologies and innovations in the market (to recognise that large merchants can assist with early adoption through leverage of their scale)
• Acquirers to separate debit and credit rates in their provision of pricing to all merchants.

About the Australian Retailers Association:

Founded in 1903, the Australian Retailers Association (ARA) is the retail industry’s peak representative body representing Australia’s $284 billion sector, which employs more than 1.2 million people. The ARA works to ensure retail success by informing, protecting, advocating, educating and saving money for its 5,000 independent and national retail members throughout Australia.

For more information, visit www.retail.org.au or call 1300 368 041.

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WHILE the Government’s “inner revolutionary” approach shows positive signs to drive economic growth and productivity, cooperation across government, business and academic sectors will be critical, according to the Institute of Public Accountants (IPA).

“Our research tells us there is insufficient cooperative behaviour between Australian businesses, creating a barrier to the spread of existing innovations to a wider cross-section of firms; this represents a significant lost opportunity to the economy,” said IPA chief executive officer, Andrew Conway.

“Australia needs action to promote increased innovation across the Australian SME sector including more government support for research and development by small and medium-sized firms; and government support for firms to adopt existing technologies and innovation.

“We also believe there needs to be better linkages between cutting-edge research universities and industry.

“Firms should also be encouraged to adopt continuous improvement methodology to embed incremental innovation as this will generate large productivity improvements more quickly.

“To help facilitate this, the Government could provide tax breaks for companies acquiring new technologies not developed in-house, along with a tax allowance for companies investing in intellectual property protection in-house, and a tax allowance for companies that generate licensing income from in-house new technologies,” said Mr Conway.

www.publicaccountants.org.au

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JUST under two weeks remain to get applications in for the 2016 RIRDC Rural Women’s Award - Australia’s top award for rural women.

The closing date for applications is Friday, 30 October.

The RIRDC Rural Women’s Award identifies and supports emerging leaders across rural Australia. More than just an award that recognises rural women, it also offers mentoring, resources and support via its nation-wide network of business and community leaders for selected state winners.

Rural women are encouraged to enter themselves or to nominate someone with a commitment and desire to making a real difference to their industry or their community. The Award is open to all women involved in primary industries.

State and Territory winners receive $10,000 to implement their Award idea and will be offered skill development opportunities, including participation in the Company Directors Course run by the Australian Institute of Company Directors (AICD).

A national winner and runner-up will be selected from the state winners with a further $10,000 awarded to the winner and $5,000 to the runner-up to support their professional development and contribution to primary industries.

Sarah Powell from South Australia was recently announced as the national winner of the 2015 RIRDC Rural Women’s Award. Sarah will use the bursary to help support rural communities through her ‘Champions Academy’ pilot program, which will foster personal development and leadership through sport and mentoring, and teach aspiring leaders how to lead by example, act with integrity, think selflessly and demonstrate commitment.

The Award is an initiative of the Rural Industries R&D Corporation in partnership with the state and territory agencies responsible for agriculture, primary industries and resources. The RIRDC Rural Women’s Award is proudly supported by the Award’s Platinum Sponsor, Westpac Agribusiness; National Partner, the Australian Government Department of Agriculture and Water; and Media Partners, RM Williams OUTBACK Magazine, ABC Radio and Fairfax Agricultural Media.

Application forms can be downloaded from the RIRDC website: www.rirdc.gov.au/rural-women’s-award.

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The Institute of Public Accountants (IPA) has welcomed the “inner revolutionary” approach announced by the Government which will look at innovative ways of driving economic growth and productivity.

“The IPA has been advocating for many of the measures hinted in the recent announcements made by the Innovation Minister, the Hon Christopher Pyne so we are keen to continue the dialogue and get the ball moving,” said IPA chief executive officer, Andrew Conway.

“We are particularly interested in the areas of crowdfunding, venture capital and the support for small business including new start-ups.

“When it comes to venture capital, we have recommended the establishment of a pilot scheme to pool public funds with private sector VC firms exclusively for capital investment projects for small and medium-sized enterprises developing new R&D products or services.

“We recommend that the scheme involve a maximum public exposure of $2 million on an equal basis with private sector VC firms.

“It is a positive sign that the Government is looking to innovation as a key economic driver; which has been a sound platform within the Australian Small Business White Paper and we look forward to more dialogue on this exciting development,” said Mr Conway.

www.publicaccountants.org.au

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