The Australian retail, financial, and online advertising markets are all highly concentrated in Australia. As the last 20 years of attempts to increase competition in these sectors has shown, there is no silver bullet to address the market power of dominant firms in Australia.

That said, there is clear consensus that new firms, and new entrants, have the capacity to disrupt existing arrangements and, in turn, increase the amount of competition and reduce prices for consumers. Conversely, barriers to the entry and growth of new entrants play a key role in maintaining the high degree of market concentration in key Australian industries.

There is no impetus for merchants to reveal the total amount they spend on customer acquisition via online advertising, or traditional advertising, and no suggestion that some customers who do not consume advertising have been cross subsidising customers who are found through those channels. Despite this, there have been suggestions by some that the cost of BNPL acquisition and payment instalment services should be separately identified at the point of sale and a surcharge imposed on customers to capture the costs of this one form of customer acquisition and instalment service.

This paper argues that such an approach would be anticompetitive, stifle innovation in the finance sector, and increase costs for consumers. Such an approach would likely result in customers being encouraged to switch to other products, such as credit cards, which may have lower point of sale merchant fees but also have higher trailing fees and higher overall costs to consumers.