Some people appear not to understand the proposals.Govt wants to...

Some people appear not to understand the proposals.

Govt wants to ban debit card merchant surcharging to the consumer and probably cap the interchange and scheme fees paid to the card issuers (banks) and international payment schemes (Mastercard and Visa) out of the merchant fee paid by the merchant to the merchant acquirer (Tyro and other terminal players).

There will still be a merchant fee payable by the merchant. They just won't be able to oncharge it to consumers (like they can't for the cost of taking cash payments) and it will probably be reduced by the caps applicable to the issuer and scheme charges.

Re impact on Tyro there will likely be some disruption on plans clients are on which likely involves some extra opex in short term as merchants move to the most logical plan for them. Some merchants will obviously struggle as will need to raise the price of the items to cover the debit costs.

Long term though it will drive an increase in debit transactions vs. both credit cards and cash payments. Latter is obviously good for Tyro. E.g. In my food court I currently pay in cash for my lunch when I use the one food retailer that chooses to surcharge. Going forward post the changes I won't. Net for the economy is positive as cash is expensive to handle. Net for Tyro and merchant acquirers is positive as more TTV through terminals. Net for the food retailer is probably a small negative as they were charging 1.5% regardless of whether a credit or debit transaction.

I seriously doubt this proposal justifies the enterprise value of this thing declining > 10% (remember TYR are net cash).