Australia's banks are dragging their feet when it comes to providing e-tailers with merchant accounts. It's a move that is stifling the growth of a local internet economy.
Brisbane-based Certified Practising Accountant Peter Kearney said: "Just go to any bank's Web site. You won't be able to find data about the cost, commission, application waiting time or other aspects of getting an online merchant's account."
Kearney is an e-commerce veteran and the author of a number of books on the subject. He recently researched e-commerce merchants in Australia, Europe and the US in order to build a merchant accounts database that he intends to publish on a Web site next month.
He said Australian banks are way behind overseas bankers when it comes to working with online businesses.
"If Australian banks don't watch out they'll be jumped by US banks," he said.
Mike Miller, who runs the Alice Springs-based Centrebet operation that offers on-line sports betting, said his organisation currently operates accounts at five European banks. He said his company has had some offshore banking now for more than a year and a half.
"We're looking at devolving part of our banking business offshore in a steady progression. If we can devolve it all, we will. And we won't come back," he said.
Kearney believes there are three reasons behind local bankers' antipathy towards e-commerce. First, they are waiting for the introduction of SET (Secure Electronic Trading) which will make online commerce more secure. However, the perceived lack of security hasn't stopped US banks from issuing accounts.
Second, there are only five banks issuing merchant accounts in Australia compared with hundreds in the US. Third, Kearney thinks Australia's banks are focused on Y2K issues.
Kearney said that in the US, a network of independent sales organisations is used to sell merchant accounts. Generally the network represents a number of banks and package merchant accounts together with other e-commerce products and services. It's a price competitive market, so it's easy for merchants to compare offerings and shop around.
One factor affecting the cost of doing business online is that the US has a central credit card fraud control system. "Our privacy laws don't allow this," he said.
ANZ Bank spokesperson Paul Edwards said the relative lack of information is a function of the way Australian banks are organised. He said that most visible information is aimed at retail customers and that specialist sales teams, operating outside the retail network, sell products like merchant accounts.
Edwards said that his bank charges merchant account holders a commission of between 2 and 6 per cent depending on the sales volume and the average ticket size of items being sold. He said these rates are exactly the same as for telephone credit card transactions and are priced 0.5 to 1 per cent higher than standard, face-to-face credit card commission rates because of the risk factors.
He said his bank prefers to have an established relationship with a merchant before they trade with a merchant account.