This post was originally published on this site
SYDNEY (Reuters) – Australia’s central bank on Friday said that buy now, pay later (BNPL) firms will no longer be able to prohibit merchants from passing-on surcharges for their services, levelling the playing field with banks and credit card providers.
Following a two-year review the Reserve Bank of Australia said it was now engaging with Treasury on “regulatory approaches” to enforce its decision – a move that has been fiercely opposed by the fast-growing industry.
While the central bank had previously flagged it would review the industry’s no-surcharge rule again in the near future, it noted that BNPL services tend to be quite expensive for merchants to accept and it “has now concluded that there is a public interest case for BNPL providers to remove their no-surcharge rules.”
Australia is home to some of the world’s biggest BNPL firms including Afterpay Ltd which this year agreed to be bought by Square Inc (NYSE:SQ) https://www.reuters.com/technology/square-buy-australias-afterpay-29-billion-2021-08-01 for $29 billion. Afterpay’s shares were flat in Friday trade though shares of rivals Zip Co Ltd and Sezzle Inc lost 2% and 1% respectively.
The RBA also said it would force eight banks and debit card issuers with about A$4 billion in annual debit transactions to give merchants a multiple network option that would allow payments to be processed more cheaply.
A multiple network option allows businesses to choose cheaper domestic systems instead of the prevalent but more expensive Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA) networks.
Other changes include requiring offshore firms to publish interchange fees on transactions on foreign-issued cards on their websites “which will be a low-cost way of shining a light on these relatively high fees,” its 108-page report https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/conclusions-paper-202110/pdf/review-of-retail-payments-regulation-conclusions-paper-202110.pdf said.
