COMMITTEES
Mr LAXALE (Bennelong) (10:45): I rise to speak on the House Standing Committee on Economics report A level playing field: report on the inquiry into schemes, digital wallets and innovation in the payments sector. I particularly acknowledge the committee chair, the member for Chifley, who did a great job in exposing everything we learnt in that inquiry, which I'll go into in this speech today.
This is a report about the fees that sit behind every time you tap your watch, your phone or your card when paying at the checkout or when paying online. It's about who in this building is willing to look at that and ask the right questions. I'm proud to be a member of this committee and I'm proud of the recommendations we have put to the ACCC, to Treasury and to government.
This report builds on the recently announced surcharge ban and lays a path for the ACCC, the RBA, the private sector and the government to lay out a competitive playing field in the digital payments space. Ask a teenager in Ryde to write a cheque and watch them search for the undo button. Cheques are behind us and payments have modernised for the better.
Australians now overwhelmingly pay with the tap of a card, phone or watch, and money moves across town near instantly. This shift has brought real convenience but has also brought hidden fees and a great deal of market power sitting with a handful of global tech companies. Every time someone pays for something, a few businesses take a slice of the sale before the business gets the rest.
When those players answer to nobody, the cost lands on businesses and the family doing the weekly shop. Before I came to this place, I ran a small business. Like 84 per cent of businesses, we absorbed those costs from these high multinationals—and they were high.
I welcome that banks have started to pass on the full interchange reduction enacted by the RBA on 1 October, but those costs are just the interchange element of the full cost. We need to do more work on the other costs, and that's what this inquiry explored. The committee measured the payment system against four tests: Can people trust it?
Can everyone use it? Does it leave room for new ideas? How can costs be further reduced?
Card payments make up around three-quarters of retail transactions across the country, and most of those payments go through Visa and Mastercard. Aussie owned and operated Eftpos keeps competition alive in the debit space, but Visa and Mastercard dominate credit and hold a large share of debit transactions. Net scheme fees paid by Australian financial institutions reached $2 billion in the 2024-25 financial year alone and grew a staggering 11 per cent year on year.
Our committee learned that it was small businesses who were being shafted by these unfair fees in the cost space. Fees are complex and unfair. As it stands, a small local shop pays a higher percentage than a multinational retailer does to accept a card.
Where some big businesses pay 0.002 per cent, some small businesses pay 2.6 per cent; that is over 1,000 times more. A cafe in Gladesville pays a bigger fee on a flat white than a giant retailer pays on a trolley-load of groceries. That is unfair, and the committee said so.
Recommendation 1 calls on the Treasurer to direct the ACCC to run a full and formal inquiry into what card payments cost. The ACCC should examine the Visa and Mastercard duopoly and work out what card acceptance costs small businesses and their customers, and compare that with what they're paying today. Between 2020 and 2025, digital wallet payments grew from 10 per cent to more than 43 per cent of all card transactions.
Around half of in-store purchases now happen with the tap of a smartphone. Big tech companies have put themselves in the middle of every one of these taps. Some collect a fee without facing the same rules that the banks face and without making the same investments in Australian payments infrastructure as others.
Apple's one of them. Every time an Australian taps an iPhone, Apple charges the bank a percentage fee on that transaction. This fee is covered by secrecy clauses and non-disclosure agreements, so the public cannot see it.
Banks cannot pass these fees directly onto consumers, but the cost still pushes up merchant fees for small businesses down the line. A fee that nobody is allowed to see is a fee that nobody can challenge. Recommendation 6 asks the Reserve Bank to consider strict transparency requirements for wallet providers that charge pass-through fees on tokenised cards, matching the transparency expected of card scheme fees.
Card scheme fees already have to be disclosed, and digital wallet fees should meet the same standard. Publishing a number costs Apple nothing and it gives banks, regulators and merchants the facts they need to shop around. Apple also keeps tight control of the tap-and-go NFC chip inside the iPhone.
An Australian bank or fintech with a good idea for a competing digital wallet cannot get access to it. Apple's answer to a local innovator is often no. Recommendation 7 asks Treasury to direct the ACCC to review Apple's market dominance in digital wallets, including its contracts and its control of the hardware.
If those contracts and fees stand up to scrutiny, a review will say so. If they do not, Australian merchants and shoppers deserve to know before the next contract is signed. Recommendation 8 asks the government to follow the European Union and require open, fee-free access to the iPhone's NFC chip.
Europe has already made that call, and Australian shoppers and businesses should not wait years longer for the same choice. If a bank or a fintech start-up in Macquarie Park wants to build a secure digital wallet for Aussie shoppers, it should get the chance to use Apple's NFC chip, just as they do in Europe. Open access will spark innovation, push down costs and give consumers a real choice.
For more than 30 years, direct debits and batch payments in this country have run on the Bulk Electronic Clearing System, known as BECS. BECS is a legacy system and it takes weekends off. Payments do not.
The new national payments platform—again, Australian owned and built—carries PayID and PayTo, runs 24 hours a day and moves money in real time. It also complies with important anti-money-laundering and counterterrorism financing laws that BECS does not. The retirement of BECS has been delayed and the date keeps shifting.
Every date that slips is another year of businesses running on a system that shuts on Friday afternoons. Recommendation 9 calls on Treasury to work with industry and set a clear, firm timeline for a full transition to the new payments platform. A firm date lets banks and businesses plan and invest, and it ends the guessing.
Small fintechs also gave evidence that they face heavy technical and commercial hurdles when they try to connect to that platform. It's not easy. A good idea from a small fintech is of no use if it can't use the payment rails and access them easily.
Recommendation 11 directs Treasury to work with regulators and industry to build a streamlined and simple access pathway for small, emerging payment companies. With direct access, local fintechs can offer fast, low-cost options, like PayTo or QR code payments at the counter, that exist in so many countries across the world. Global card schemes and big tech dominate our payments cost base.
We back small business. This report hands down a set of recommendations on how the payment systems can be further reformed, building on the important work of the surcharge ban which came into effect on 1 October. I thank the chair, the member for Chifley, and committee members for the amount of work that's gone into this report and also the secretariat.
New technology and convenience should never be an excuse for foreign tech giants to collect hidden fees or lock out local competition. I would encourage the ACCC to investigate card costs further to question Apple's dominance and make wallet fees visible and for all involved to open up the NFC chip so that we can have a vibrant and competitive local and domestic payments sector here in Australia.
I commend the report to the House. Debate adjourned.