Opinion: The true cost of not supporting small business


By Suzan Kereere, Visa Global Head of Merchant Sales and Acquiring


The journey of the small business owner is one close to my heart. Having spent my career building digital payments acceptance globally, I’ve had the privilege of meeting business owners around the world and their passion has fuelled mine.

I won’t pretend to fully understand the highs and lows of running your own business – this is something only learnt through living. But I’m not shy about advocating for the needs of small businesses. After all, small business is in fact very big business: in 2016, the World Trade Organisation estimated that small and medium size enterprises represent 60-70 per cent of employment and 55 per cent of GDP in developed economies.

Helping small businesses to grow is why I do what I do. Digital payments are central to their growth – a 2017 study titled Cashless Cities found that if Sydney were to reach its highest achievable state of cashlessness, businesses in the city could receive up to $9.84 billion per year in direct net benefits.

But Australians already know the benefits of digital payments. Australia is a nation of tappers, with the majority of payments conveniently made by tapping a card, phone or watch. And it’s this technology – which over the past decade has driven sales growth and reduced fraud for Australian businesses – that has become the focus of retailers and regulators alike.

I’m generally encouraged by this focus. Digital payments are critically important for every business, and business owners should understand their value and their cost. What concerns me are some of the cost estimates highlighted in media that I don’t believe tell a complete story.

For example, the ‘Fairer Merchant Fees Alliance’ has estimated the cost of accessing two international payments networks – one being Visa – to be four times higher than the domestic network. In my view, this is questionable at best; at worst, and without context, it’s misleading.

Not every payment transaction is the same and there are a number of cases when an international network is actually less expensive for a small business than the domestic network. Moreover, the figure doesn’t account for the fact that businesses usually negotiate their fees with their banks, and there are many different ways payments services can be charged. The payments networks aren’t involved in these negotiations – as our contracts are with the banks – but like any business operating in a highly competitive environment, Visa strives to ensure its price point isn’t a barrier to success, applying principles of supply and demand with an understanding of the local market.

What is even more troubling to me is the focus on these cost estimations without consideration of the value each network delivers. Business owners know that when you’re spending your hard-earned capital, you want to be sure you’re getting the best. With Visa, comes a global network of cardholders – all of them potential customers for a business –, multiple sales channels, and world-leading security. In 2019, Visa prevented more than $400 million of fraud from impacting Australian businesses.

We also provide credibility to small businesses that, in my view, is unmatched. A study by Ipsos Loyalty conducted in Australia, Singapore and Hong Kong found that 50 per cent of people spend less at a store when they don’t see the Visa brand, and in Australia, Visa is the most trusted payments brand.

There are other numbers to consider as well. The RBA reports that in the four quarters to November 2019, international payments networks enabled Australian businesses to receive $74.1 billion in sales on debit cards that wouldn’t have been possible on the domestic network. When you think of the jobs this demand creates throughout the supply chain, the value of the international payments networks to Australia is clear.

Looking at these numbers calls into question the arguments being made for business owners to route transactions away from Visa, opting out of the benefits delivered by our industry-leading security and innovation. With a global view and an intimate understanding of the fierce competition Australian businesses face both domestically and from companies around the world, I wonder whether this approach is truly in the best interest of Australian business owners and the national economy.

Australia is not the first market to look at mandating transaction routing, but in my view, it is unique in how little consideration is being given to the rights of consumers. In other markets where I’ve seen routing discussed, the ultimate objective has been to enable merchants to provide their customers with more choice in how they pay. This is not the case in Australia, with potential for consumers not to be able to ensure their financial products perform as they expect them to, or that the security promised by the brand on their card is protecting them when they pay.

This goes against what is at the heart of many small businesses – creating and delivering experiences that keep customers coming back. Around the world, small businesses are built on the premise of customer experience. Business owners, industry and government need to work together to ensure that in the conversation about cost, this focus isn’t forgotten.

Visa’s 3.4 billion cardholders made 138.3 billion transactions in 2019, each of them benefiting businesses and helping local economies to grow. With our global network, we may be a big business but we wouldn’t be anywhere without the millions of small businesses we enable every day – it’s why we invest in technology to lower costs and help level the playing field. Their success is our success and we are committed to their growth.


About Visa Inc.

Visa Inc. (NYSE: V) is the world’s leader in digital payments. Our mission is to connect the world through the most innovative, reliable and secure payment network - enabling individuals, businesses and economies to thrive. Our advanced global processing network, VisaNet, provides secure and reliable payments around the world, and is capable of handling more than 65,000 transaction messages a second. The company’s relentless focus on innovation is a catalyst for the rapid growth of connected commerce on any device, and a driving force behind the dream of a cashless future for everyone, everywhere. As the world moves from analog to digital, Visa is applying our brand, products, people, network and scale to reshape the future of commerce. For more information, visit About Visa, https://usa.visa.com/visa-everywhere/blog.html and @VisaNews.