RBA regulation will ruin the Aus Zip...

RBA regulation will ruin the Aus Zip business...


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Ms Bullock said that “businesses should be able to pass on the cost of the payment methods chosen by end users”.

“We have concluded that merchants should have the right to surcharge BNPL [buy now pay later] services, which are expensive means of payment, just as they have the right to surcharge card payments.”

She added: “The right to surcharge for payment methods provides an important incentive for payment schemes to keep their fees low.

“Formal regulation may be required to allow this.”

Currently, merchants are charged a merchant service fee of between two to eight per cent of the total of each transaction by buy now pay later providers, with the amount varying between different providers.

But what they all have in common is a clause in their merchant agreements that prohibits the merchant from passing this cost onto the consumer, which currently gives buy now pay later providers an advantage over credit card issuers.

Currently, if a merchant is charged a four per cent fee on a $100 purchase, the cost of the $4 fee is borne by the merchant, who only receives $96 for the sale.

Regulation allowing this cost to be passed on would mean that a consumer using buy now pay later would pay $104 for a $100 item, which will make using buy now pay later more expensive than paying by EFTPOS or using cash.