The $29 billion Big Bank Rip Off
Today’s much anticipated government inquiry into Australia’s banking system has failed to reveal the extent to which consumers are not getting a fair go on their $480 billion worth of annual credit and debit card transactions. Australia’s leading independent payments provider, Tyro, said the findings should have shed light on how much of the $29 billion in annual banks profits should be returned to customers.
Former Commonwealth Chairman, David Murray, handed down his interim findings at the National Press Club today.
“Greater transparency in charges for credit and debit cards are needed for all customers, particularly the 550,000 small business operators who pay significantly higher fees than larger retailers,” Tyro Payments CEO Jost Stollmann said today. “Australia’s small-to-medium enterprises employ 7 million Australians and are the engine room of innovation and growth in the Australian economy. They deserve a fairer go than they currently get from the big banks, which have enjoyed a cosy little club for more than 100 years, free from real competition.”
“Today’s government report on Australia’s banking system is a lost opportunity to reveal the extent of unfair pricing on customers, that feeds directly into the $29 billion worth of record bank profits. It is the poor customer who is the victim.”
Currently Australians have their payments processed by a combination of the major banks’ ageing payments platforms, and a small but growing group of cutting edge alternatives. A key trade-off between payment system stability and fostering an environment where innovation and technology can better meet user needs is the gambit of Murray’s inquiry.
Mr Stollmann said that while hundreds of hopeful startups innovate at the periphery, providing consumers with a better user experience on flashy mobile devices, the four major retail banks and VISA and Mastercard had solidified their dominance in recent years. “The barriers to entry to take on Australia’s banks, and to scaling up, are persisting and remain enormous,”1 Mr Stollmann said. “Where are the real success stories in banking and in payments, that benefit consumers? Only PayPal has been a significant new player.”
When Tyro Payments started in 2003, three extremely talented and naïve engineers felt they could take on the banking establishment. The Reserve Bank of Australia had invited new entrants. They were the only ones that came. Today, Tyro is the one and only independent EFTPOS provider in Australia. It just closed the 12th year of operations, processing $5.3 billion in credit and debit card transactions for 10,000 small-to-medium businesses.
”Tyro’s experience proves that one can compete successfully with the banking oligopoly, but it is hardly disruptive,” Mr Stollmann said. “There is a big difference between competing for core processes in the heartland of banking or for new user experiences on cool mobile devices. The former faces the anti-competitive structures and culture of the banking industry, the latter build new worlds outside of the banking system.”