Surcharge bans, online shopping straight from bank accounts, and other modern methods of payment that are already standard in Europe could all be about to change the payment landscape in Australia.
Those are the predictions of Ben Zyl – the CEO of digital wallet company Waave – who said that they will depend on an interplay between government action, the RBA and big companies.
The first change he predicts for 2025 is a new law banning debit card surcharges after the government in October proposed a permanent ban on debit card surcharges from 2026.
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“We will see a ban on surcharging for debit cards, but it will take an additional 12 months to come into play,” Zyl said but added “the surcharging problem is likely to remain unchanged” due to the RBA’s limitations.
“The RBA as yet does not have the power to limit interchange fees … and has no visibility on card scheme fees,” he said.
While in some countries surcharge bans extend to credit cards, the proposed ban in Australia does not.
Zyl said this is “leaving the door open” for businesses to charge “blanket ‘card fees’ to cover all bases.”
RMIT University Associate Professor of Finance Angel Zhong said it won’t affect all Australians the same — those with small businesses will be worse off, while larger business can use their bargaining power to bolster profits in other areas.
“In Australia, there’s a significant disparity between the fees paid by large and small merchants. In fact, RBA data shows small businesses pay fees about three times higher than what larger businesses pay,” she wrote for The Conversation.
“Banning surcharges on these could potentially lead to merchants increasing their base prices to cover these costs.
“The absence of surcharges could also reduce the competitive pressure on card networks to keep their fees in check, potentially leading to higher costs in the long run.”
‘Making life easier’
The second prediction is a major uptake of PayTo — a digital alternative to direct debits already facilitated by banks in Australia — by “major billers like energy companies,” Zyl said.
“In 2025, PayTo will switch from a ‘wait and see’ for merchants, to a must-have on their payments road maps.
“PayTo will find its niche across enterprise retail and major billers like energy companies. These are the businesses that have the capacity to introduce it at scale and provide a clear consumer proposition like no surcharges on big-ticket transactions.”
He said it will offer a “one-click user experience for paying bills while making life easier on the back-end for merchants.”
“Once these dominoes fall, it’s only a matter of time before smaller retailers also jump onboard, but they will want to see it out there first.”
‘A pivotal year’
Zyl’s third prediction is that account-to-account payments such as “Pay by Bank” — which cuts out intermediaries such as cards, and is already “virtually mainstream across Europe” — will become a less scary option for consumers here.
“As account-to-account payments in areas like bill payments increase, consumer awareness about the ease and security of Pay by Bank will grow,” Zyl said.
“2025 will be a pivotal year for providers to demonstrate how this works and why it should be standard across any checkout.”
Even the nation’s legacy account-to-account Bulk Electronic Clearing System (BECS), used for pension, welfare, salary and dividend payments, is set to have all payments migrated to the New Payments Platform (NPP) by 2030, according to the RBA Payments System Board Annual Report.
The industry set a wide target for completion with the understanding that “significant disruption to BECS could cause serious economic harm to end users” and that “the significant changes required to facilitate decommissioning have the potential to heighten risks across the payments system.”
Scan-and-Go
The last prediction is that debit cards will be ditched in favour of self-serve payments, using the technology like that underpinning Woolworths’ ‘Scan and Go’ trolleys.
“Consumers will just connect their account and be debited after packing their bags,” Zyl said.
But it won’t be a widespread phenomenon for some time still, he predicts.
“It will take years before we see this idea introduced across smaller businesses, but the big end of town is focused on building payments into the journey through a store without the need to pull out a wallet or phone,” he said.