CBA puts millions back in SMBs’ pockets with lower merchant fees

James Fowle, Executive General Manager, Business Customer Solutions at Commonwealth Bank

Commonwealth Bank is making payments simpler for SMBs by announcing new competitive flat rates for all in-store and online payment transactions for eligible merchant customers.

To lower the cost of business, CBA will offer 1.1% for in-store card transactions and 1.5% for online transactions regardless of the interchange rate or card type like debit, credit or Amex.

Commonwealth Bank Australia will also take the hassle out of payments by automatically routing transactions between eftpos and international schemes for eligible SMB customers.

Commonwealth Bank Australia will centrally route transactions in the most cost effective and competitive way, so businesses don’t have to spend time managing their routing options.

Why is Commonwealth Bank lowering merchant fees?

CBA’s Executive General Manager for Everyday Business Banking, James Fowle said the announcement follows feedback from its merchant customers on Least Cost Routing (LCR) and the overwhelming message is small businesses want things simpler, easier and cheaper.

“The feedback from SMBs is that they want simple competitive pricing. They want the benefit from least cost routing without having to manage the routing,” Mr Fowle said.

“Our new flat rates are designed to offer that by removing complex pricing structures and managing the routing of transactions. We’ll automatically and centrally route transactions in the most cost effective and competitive way, saving businesses a lot of time and money.”

This low cost rate will become the default and eligible small businesses will automatically receive the reduced single rate from October 2021 onwards with no need to opt in or apply.

“We are taking the guesswork out of it for the small businesses who don’t have the time to individually assess and compare the costs associated with different schemes,” Mr Fowle said.

“The flat rates provide an easy way to recover costs through surcharging at a single rate.”

To provide a cash injection in the lead up to Christmas, CBA will automatically waive three months of merchant fees for SMBs who have been hardest hit by the latest COVID lockdowns.

This equates to more than $7 million dollars back into the pockets of merchant customers.

“We’ll be letting more than 50,000 customers know we are automatically waiving their standard merchant fees for three months from September through to November.”

“This translates into $7m back into their pockets leading up to Christmas,” said Mr Fowle.

Commonwealth Bank gifting clients this Christmas

CBA said a further $3 million has been refunded to merchants experiencing financial difficulty since the start of the pandemic. Any merchant customers experiencing financial difficulty can contact CBA for a refund on a variety of applicable fees for up to 90 days.

The announcement complements the recent release of StepPay which is another innovative Commonwealth Bank Australia initiative that is offering support to Australian small businesses.

BNPL products charge merchants a fee of up to 7% but StepPay only charges merchants credit card transaction processing fees which are substantially lower than traditional BNPL products. 

Merchants do not incur integration costs or face disruptions with their Point of Sale systems and Online check outs, as StepPay is processed like other credit card transactions. 

This puts savings back into the pockets of smaller businesses and helps to level the playing field by allowing them to better compete with those who are able to pay higher BNPL costs.

As CBA has done in the COVID-19 pandemic, they will continue to look for ways to support SMB customers and help them recover as lockdowns are lifted and they open back up.

Eligible CBA small business customers with turnover equal or less than $250,000 will have the new simple rates automatically applied from October 2021.