COMMITTEES
Mr HUSIC (Chifley) (12:07): On behalf of the Standing Committee on Economics, I present the committee's report entitled A level paying field: report on the inquiry into schemes, digital wallets and innovation in the payments sector, together with the minutes of proceedings. Ordered that the report be made a parliamentary paper. Mr HUSIC: by leave—Tap.
Pay. Go. There have never been more ways to pay for things Australians want.
Moving from cash to card has seen a massive shift within our payments system. On average, Australians use a credit or debit card 540 times a year. Non-cash payments worth nearly $300 billion are made every business day.
That equals an 11 per cent slice of our annual GDP. It's a big deal generating a lot of revenue. Every tap of a card, every payment of a phone, every online purchase passes through a maze of companies, platforms and payment schemes.
Most Australians don't know how all this works, but they know they pay for it. The inquiry into schemes, digital wallets and innovation in the payments sector asks: are we all benefiting from the extraordinary transformation of our payments system? Evidence showed a payment system that is very clever, very complex, very concentrated and very closed off to new challenges.
Companies that invest in new ways of doing things should be rewarded for that investment. But, as is often the case, the firms that throw huge investment dollars to master the technology end up mastering markets, and they use that clout to set the terms of service and what we pay for them. The sheer multiplicity and complexity of scheme fees is a case in point.
The committee heard that net scheme fees reached $2 billion in value in a single year, growing by 11 per cent in just 12 months, and the Mastercard and Visa duopoly—the companies that don't think they're sitting in a duopoly, by the way—find it hard to explain why, in some cases, they might charge up to 400 different scheme fees. Imagine opening up your electricity bill, finding 400 different line items, each with a different name and different purpose, spanning 800 pages.
Most Australians wouldn't know where to start, let alone have the time to filter through all that information to shop around for the best deal. Time- and resource-poor small businesses are expected to somehow make sense of the cost of accepting a card payment through Mastercard or Visa, and the reality is that they often have to wear this cost because they have no other choice.
Customers want to pay in the easiest way—a way that's dominated by massive, global firms. Surprisingly, even large players such as our banks struggle to understand this maze of scheme fees. If the banks representing some of the biggest companies in the nation can't negotiate their way through this, what chance does a local cafe, butcher or retailer have?
If it's good to call out the effect of government red tape on business, then let's do the same when corporate red tape like scheme fees punish small businesses and consumers. It's important we empower and encourage the RBA to drive unnecessary costs out of our payment system. Lower costs, lower prices and lower inflationary pressure is good for the economy.
Australia needs a simpler, more transparent payment system that is more open to competition and delivers a fairer deal for smaller businesses and consumers. This report deliberately asked uncomfortable questions of very powerful players in the payment system. We made over a dozen recommendations, including that, if Mastercard and Visa reckon they're not a duopoly, let's test that, just like they did recently with the supermarkets.
The ACCC should begin an inquiry into card payments in Australia to understand how the dominance of global players affects our economy. A burning spotlight should be fixed on the complexity and number of card scheme fees. Card schemes should explain the reasons for these fees and prove that they're not just there as a clever way to pad profits.
Speaking of market dominance, one multi-trillion dollar company increasingly controls how millions of Australians tap and pay on their phones. The ACCC has a role here to see whether Apple's digital wallet stranglehold limits competition and whether we're all paying more for that. We should look to see how Apple could open up access to its near-field communications technology, and our banks should prove that getting access to Apple's NFC can meaningfully deliver for customers.
If it can be done in the EU, it can be done here. There's a lot of talk by card schemes of special small-business rebates, but there's a big question as to whether these savings actually reach small businesses. We want the Reserve Bank to make sure that greater transparency and lower costs are genuinely flowing to small businesses and, ultimately, customers.
Finally, since competition has been shown to drive down fees and costs, we need to build the growth of clever Australian fintech firms to provide that competitive pressure, and we need to make it easier for those fintechs to access our payments infrastructure. I want to thank everyone who contributed to the inquiry, which occurred while the RBA was completing its review of merchant card payment costs and surcharging.
We want to thank the RBA for its important work in this space. I also want to thank the deputy chair and all the committee members for their commitment to this inquiry, which was held in a very bipartisan spirit and where everyone, I hope, felt that they could make a contribution. I also want to thank the secretariat for their mammoth amount of work in helping support the inquiry and my own team as well.
The benefits of innovation should be shared by many, not hoarded by a few. If Australians are going to keep embracing new ways to pay, then they deserve confidence that the system behind every tap, every click and every transfer is open, competitive and fair—a genuinely level paying field.