[ANZ, CBA back ban on ‘no surcharge’ rules used by Afterpay]

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ANZ, CBA back ban on ‘no surcharge’ rules used by AfterpaySkip to sections navigationSkip to contentSkip to footerCommonwealth Bank and ANZ Bank say the Reserve Bank should take regulatory action to allow retailers to surcharge customers who pay using buy now, pay later schemes such as Afterpay.As the central bank considers intervening in a way that some believe could damage Afterpay’s business model, the two banking giants supported action by the RBA to ban “no surcharge” policies used by Afterpay and other buy now, pay later (BNPL) schemes.The Reserve Bank is considering banning Afterpay’s “no surcharge” policies.Credit: Dominic LorrimerAfterpay, a short-term lender that has seen its market value surge to $10 billion in the past year, makes most of its revenue from charging retailers fees of between 3 and 6 per cent of the purchase price. This is far higher than what retailers pay to accept credit cards and, unlike these schemes, Afterpay requires that merchants do not recoup their costs by adding a surcharge to customers on the purchase price.The RBA is considering intervening to allow retailers to impose a surcharge because of concerns Afterpay and other BNPL providers are driving up retailers’ payment costs.In submissions to the Reserve Bank’s review of payments regulation, the banks argued for the “no surcharge” policies to be removed, saying this would create a level playing field in the payment industry.”ANZ supports the right of a merchant to surcharge and the RBA’s view that this increases cost transparency in payments, promotes efficient customer choices and assists merchants,” the bank’s submission said.”ANZ supports the consistent application of this framework to all participants in the payments system, including BNPL providers.”CBA also called for a “consistent approach” to how different payment products are regulated. “CBA would encourage the RBA to ensure there is competitive neutrality of regulatory outcomes, to products and providers operating in the same market,” CBA said.In contrast to the banks, Afterpay has argued that it should be allowed to have “no surcharge” policies because it is more than a payment system, and is in fact a marketing platform that competes with Google and Facebook to generate leads for retailers.LoadingZip Money’s submission also pushed back against RBA intervention, saying it acted as a marketing acquisition partner, and there was no evidence BNPL products were leading to higher inflation.As well as ANZ and CBA, the Customer-Owned Banking Association also said merchants who accepted BNPL should not be prevented from charging a surcharge.Four leading consumer groups last week argued that the “no surcharge” policies should be scrapped, saying the extra cost to retailers ended up being borne by all customers, however they paid.The RBA will now determine whether to treat BNPL businesses differently from credit cards, given their different business models and the fact BNPL payments were only about 1 per cent of payments last year. If the RBA does intervene, merchants would still have the option of not imposing a surcharge for BNPL payments.Westpac and National Australia Bank also made submissions to the RBA’s review of retail payments, but these were not made public.Most Viewed in BusinessLoading

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