RBA warns of ‘lock-out’ risk from rise of phone payments

RBA warns of ‘lock-out’ risk from rise of phone payments

The Reserve Bank has warned that growth in payments driven by smart phones, watches and other wearable devices must not stifle competition, as this would push up costs for business.

As more consumers move towards using their smart phone as a “digital wallet,” payment scheme Eftpos has recently complained that they are too often being excluded in favour of Visa and Mastercard’s debit payment systems, and the RBA echoed these concerns on Thursday.

Michele Bullock, an assistant governor with responsibility for the financial system, said that the shift to tap-and-go payments had caused payment costs for businesses to rise.

This happened because there was a sharp increase in payments going via the higher-cost Visa or Mastercard network instead of through Eftpos as had occurred previously.

She said most banks were now dealing with this issue by giving businesses the option to divert these payments via Eftpos, but the RBA was closely watching the next shift towards “digital wallets.”

“As payments move to different form factors, such as mobile phones or wearables, and new technologies are introduced, there is a risk that some may use it as an opportunity to lock out competitors,” Ms Bullock said.

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Source: RBA warns of ‘lock-out’ risk from rise of phone payments