I am grateful to Hank Spier for chasing the following notes with me on the issue of the EFTPOS fee increase engineered y ePAL, the body controlled by the major banks plus Coles and Woolworths.
In February 2011 EPAL announced a new multilateral interchange fee regime to replace the existing bilateral arrangements. EPAL is made up of the banks and Coles and Woolworths. EPAL’s reasons for the changes is to get additional moneys for technology upgrade of the Eftpos network.
For those members of EPAL which opt into the new multilateral interchange fee model, the following fees will apply to the banks involved in an Eftpos transaction,
- for all purchases of less than $15 (where no cash is withdrawn) there will be no interchange fee.
- for all purchases of $15 and over, there is a fee of $0.05;
- for each cash withdrawal (whether combined with a purchase or not) there will be a fee of $0.15.
The effect of the new regime is where there is a purchase of $15 or more, combined with a cash withdrawal there will be a fee of 10 cents. To add to the cost impact fees of 4-5 cents rebate previously paid to the merchant’s bank has been abolished.
Normally such agreement between competitors will be subject to ACCC scrutiny but in this case the ACCC has not jurisdiction as the Reserve Bank has the regulatory role. The RBA has been generally supportive of the fee changes. The Federal Government has refused to get involved despite requests from small business.
There was much opposition to the changes from small business especially from the AHA and newsagents associations. ALDI took EPAL to the Federal Court alleging misleading conduct, namely that EPAL had been saying that it is unlikely that consumers would pay any more. The emerging facts were very different. ALDI won on 29 September. EPAL will have to place corrective advertisements in the national press. The AHA and newsagents associations assisted in the ALDI action.
The new fee regime came into effect on 1 October. It is up to individual banks what they do in relation to passing on costs to retailers. As a result of the opposition and the ALDI case two banks have backed off, the CBA has promised not to pass on the increased costs to retailers and NAB will limit the costs to be passed onto small businesses. St George has said that it will pass on increased costs.
Where banks do charge it is up to business to assess whether or not they pass on the costs to consumers, if they can.
Where the banks do pass on costs I suggest that,
- business approach their bank to see if something can be done about the increase,
- Trade associations look at collectively bargaining with those banks on behalf of businesses affected.
The individual fee increase involved is not high but will add up in high transaction volume businesses
While some banks have said that they will not increase fees, I don’t see this as their long term position. They are banks after all.
I’d encourage newsagents to take Hank’s advice.
Hank’s a good stick.