The Reserve Bank of Australia on Friday (Oct. 22) said buy now, pay later (BNPL) companies can’t stop merchants across the country from implementing surcharges for their services, Reuters reported, following a two-year review of the situation.
Australia’s central bank is now working with Treasury officials on “regulatory approaches” based on the decision, a move that BNPL companies say will take away their key differentiator. Reserve Bank officials pointed to the cost for merchants to accept BNPL and says “there is a public interest case for BNPL providers to remove their no-surcharge rules.”
Afterpay, which recently agreed to become part of Square for $29 billion, is based in Australia. The company doesn’t expect any major changes to its operations because of the Reserve Bank’s ruling but wants the alterations to go through the Australian government and parliament before being enacted.
Banks and credit card providers, of course, can’t stop merchants from passing on the fees they pay to their customers, but because BNPL firms don’t charge interest, they don’t need to follow the provisions of Australia’s credit or responsible lending laws.
The Reserve Bank also plans to make eight banks and debit card issuers across the continent, which handle about $4 billion AUD (almost $3 billion) in debit transactions annually, offer merchants a multiple network option — companies other than Visa and Mastercard — to process their payments cheaper.
Offshore companies will also have to post their interchange fees for foreign-issued cards on their websites as part of the Reserve Bank’s 108-page ruling, calling it “a low-cost way of shining a light on these relatively high fees.”
Earlier this month, Australian FinTech Till Payments wrapped up a $110 million AUD ($80 million) round of Series C fundraising that it plans to use on its North American operations, global consolidation and new payments technology services.
Till will use the money to boost its proficiency in the U.S., the U.K., Europe and Asia-Pacific as well as hiring new employees.