No more fee free eftpos

[Jim Goose]

Australian shoppers are being warned they may be charged a new fee from tomorrow when using debit cards at eftpos machines.

Retailers will be now be charged a fee every time something worth $15 or more is put through on a debit card.

The company which runs eftpos, ePAL, says it needs to increase its charges so that banks can afford to invest in new debit card technology.

One business which provides eftpos services says the major banks could earn $150 million a year.

When eftpos technology was first introduced, it was the cardholder's bank which paid the 5 cent fee for the transaction with the retailer's bank.

That was designed to minimise the cost to the retailer and so encourage the uptake in retail outlets.

It succeeded magnificently; there are now about 2 billion eftpos transactions in Australia each year.

But from tomorrow the retailer's bank will pay the 5 cent fee.

Russell Zimmerman, the executive director of the Australian Retailers Association, says some businesses may absorb the fee.

"Some retailers will need to surcharge but I think you'll find the majority of our retailers out there will not be surcharging," he said.

"They don't surcharge currently for Visa credit cards or Mastercards and the same with both of those schemes, and often don't charge for American Express or Diner's Club cards, which often have a much higher interchange fee than what eftpos has."

But Mr Zimmerman says some retailers may need to charge a small fee.

"For some retailers, particularly retailers in very low profit rating ... you may see them come up and decide that they're going to charge a small fee at the counter," he said.

"There are all sorts of retailers that have got high-volume, low-profit-margin goods and those retailers will need to consider whether or not they need to surcharge."
Up against the banks

The company which manages eftpos, ePAL, is owned by the big four banks along with Coles and Woolworths.

A spokesman declined an interview but says the charge was designed to deliver more money for debit card technology so it could compete against the new chip technology being used in credit cards.

Jost Stollman's company Tyro provides the eftpos banking services for many retailers, competing against the banks for the business.

He now faces paying the charge without receiving any money in return, so is at an instant disadvantage.

"For our merchants and for us, this is a very significant change in the fee structure in the Australian market," he said.

"Take the example of a small newsagent. He's actually competing with Coles and Woolworths when he sells his newspaper and if he is charged 5 cents more or less on each transaction [that] makes a difference to his bottom line."

Mr Stollman says if the banks pass on the charge to retailers and pocket it as card-holding banks, they could reap $150 million a year.

Westpac says it will pass on the charge. ANZ says it has not decided what to do, while the Commonwealth Bank and the National Australia Bank have not yet responded to the ABC's request for comment.

'Way over the top'

Consumer group Choice is worried the retailers will now pass the extra cost on to customers.

Spokesman Christopher Zinn believes what used to be a free swipe will end up costing something.

"I have already found a Chinese restaurant in Bondi that last week, before any changes, was charging a 2 per cent fee for eftpos," he said.

"Now if you bear in mind that $15 is free, there's no fee for $15 and after $15 it's 4 or 5 cents, there's really no justification for any kind of fee with percentages.
"It's way over the top. I'm afraid either through ignorance or opportunism we're starting to see these fees creep in and I think consumers need to be aware of that, resist and question them where they can."

http://www.abc.net.au/news/2011-09-3...es-twt/3204230

Thank you coles and woolies...