Eftpos Sees Market Share Surge in Online Payment Processing

Eftpos, the domestic debit scheme, has experienced significant market share growth in the online payment processing sector. This is believed to have prompted price reactions from international card schemes Visa and Mastercard.

According to Australian Payments Plus, Eftpos has captured 25% of the card-not-present debit payments market since launching its online processing feature in July 2022. This considerable advancement is estimated to have added a minimum of A$30 billion to Eftpos’ total volumes over the past year.

Visa and Mastercard Respond to Eftpos’s Market Gains

In response to Eftpos’s market growth, Visa and Mastercard appear to be taking steps to prevent further market share losses. Recent data from the Reserve Bank (RBA) suggests these international card schemes are reducing the costs that merchants incur for online transactions.

The RBA data shows a notable decrease in the average merchant fees collected on card-not-present transactions processed by Visa and Mastercard in the third quarter of 2023. These transactions include payments made over the internet, within applications, or via telephone communication.

Merchant Service Fees Decrease

In the June quarter, the average merchant service fee for card-not-present debit transactions processed by Mastercard was 50 basis points. However, this figure dropped to 45 basis points in the three months leading up to the end of September. Meanwhile, merchants saw slightly lower costs when accepting online payments processed by Visa in the September quarter. The average service fee for Visa transactions dropped from 47 basis points in the June quarter to 43 basis points.

Repricing Strategy of Visa and Mastercard

The reductions in online transaction fees by Visa and Mastercard were partially offset by higher average fees charged to merchants for accepting debit transactions through point of sale terminals. Average fees for Mastercard transactions at point of sale rose by 1 basis point in the June quarter, while Visa transactions saw a similar increase.

Eftpos Remains the Cheapest Provider

Despite the lack of published data regarding Eftpos’s pricing for online transactions, the Australian-owned scheme is still considered the most affordable provider of debit processing services to retailers overall. The average fee for Eftpos-processed debit transactions across all payment channels is 34 basis points, which is significantly lower than the 51 basis points charged by Visa and Mastercard across all channels.

Despite this, Australian banks, including NAB and CBA, continue to default debit transactions to the global schemes, resulting in higher acceptance costs for many of their small business customers.