EFTPOS fees

Click here to see a press release issued on Friday last week by Tyro, the broadband EFTPOS processing business loved by newsagents. This press release continues to raise the issue of fairness as embodied by this quote from Jost Stollmann, CEO of Tyro.

“We certainly consider it unfair for Australia’s shops to face the risk of up to 10 cents higher eftpos costs, when Coles and Woolworths continue to be paid 5 cents for each of their eftpos transactions.”

I think it’s unfair too. It looks like the banks are about to rip us off – added and abetted by the Reserve Bank plus Coles and Woolworths.

My question for newsagents is – what have you done to fight about this. I know that some of you have … but not enough. Every newsagent should be incensed about this and lobbying their bank and local politicians. Come October 1 it will be too late.

In the meantime, I’d encourage newsagents to switch from their current bank EFTPOS provider to Tyro – you’re likely to save money. Most newsagency systems interface directly to Tyro.

Click here to see a story on A Current Affair last night about the EFTPOS fee hike facing newsagents and other retailers.  This story came about as a result of excellent work on this issue by the ANF.

I have been calling on newsagents to get onto this issue, lobbying parliamentarians and the like.  It is not too late.

In 2010, banks increased their fees on business by 13% to $6.9 billion. In 2011, banks decided to increase the interchange fee for EFTPOS transactions by 10 cents, except for Coles and Woolworths. Now, small and medium business customers of the big banks face competing in an even less balanced playing field.

We need to ask why the big bangs have worked together to create a fee increase which is certain to hit small businesses but not Coles and Woolworths.

Tyro, the broadband EFTPOS payments company used by more than 700 newsagents, has published a press release which goes into more details on this.  Click here to access to press release.

Newsagents need to ask their banks about their role in this fee increase and whether the higher interchange fee will flow to fees we pay.

NAB is spending a lot of money saying that they have broken up with other banks.  On this issue, they have not.

It is good to see the US Senate permitting the US Federal Reserve to move on credit card processing fees charged by the banks as reported by USA Today.

Newsagents and other small and independent retailers in Australia face an unfair EFTPOS processing regime thanks to the decision by EPAL, the organisation controlled by the major banks plus Coles and Woolworths.  Newsagents need to engage to fight for a fairer playing field.

Click here for a copy of the briefing paper which the ANF has given permission to publish.

Click here for a copy of a letter developed by the ANF and which which you can personalise and send to your local member of parliament and senators for your state or territory.

Click here for a list of house of representatives members and here for a list of senators. With this information you can easily, call, email or write to your local parliamentarians and get them engaged on this issue.

Here is the text of a follow up letter I have sent to my local member of parliament on the EFTPOS issue.  I am sharing it here to give newsagents an idea of how they might respond to the letters from some  parliamentarians which look like they have been written by the same person.

EFTPOS FEES AND EPAL

Thank you for responding to my correspondence.

Bruce Mansfield, CEO of Eftpos Payments Australia Limited (EPAL) has done a wonderful job fighting off queries from politicians seeking answers on behalf of their constituents.

While EPAL has nothing new to say, it has done so inn such a way as to spin that the new fee regime is an opportunity for retailers.

It is more spin designed to deflect attention from the role being played by his board which is controlled by the major banks, Coles and Woolworths.

The facts which Mansfield ignores are:

1. The 12 million Visa and MasterCard debit cards are dual cards i.e. also EFTPOS cards. They can be used in both networks depending on the cardholder pushing credit or check/savings.
2. The EFTPOS network has become more expensive i.e. 1.2B Transaction by 11 cents, 800M by 6 cents. I am flabbergasted by the claim of “net impact zero”.
3. The retailers can negotiate with acquirers challenging the acquiring margin, but how are they negotiating with issuers challenging the interchange fee? That is the one that was raised.
4. The acquirer and retailers have to carry the bulk of the investment to save EFTPOS from the Bankcard demise. Why do they get charged?

Bruce Mansfield serves the issuing banks and major retailers sitting on his board to levy an ”EFTPOS tax”. It is a fee that banks now get to continue to issue EFTPOS functionality on their debit card.

Unjustifiable and untimely. His best position, if he had the survival of EFTPOS at heart and if he could decide, would be to maintain the cost advantage of EFTPOS versus scheme debit cards.

I hope that you and your colleagues support small business and help us to gain attention for this issue at the highest possible level.

If nothing is done, small and independent retailers will soon face higher EFTPOS fees than Coles and Woolworths. This would be unfair. It would also make a mockery of competition and small business policy.

EPAL should not be controlled by the banks or major retailers. It is like putting an alcoholic in charge of the bar. Of course the banks and retailers in control of EPAL will make decisions which suite them.

Retailers like family run newsagencies need your help, your voice challenging this new EFTPOS Tax. We need you to fight for us.

Don’t let go of this issue newsagents.  Keep engaging with your local politicians.  Otherwise you could be complaining about higher EFTPOS in the future knowing that you did not act today.

A newsagent in Western Australia received a lively and engaged response from Dr Mal Washer, federal member for Moore.  Kudos to Dr Washer as this is a personal response and not a regurgitation of the spin from EPAL – the company controlled by the banks, Coles and Woolworths which is responsible for the soon to start new EFTPOS fee regime.

Dr Washer joins a small group of members of parliament who have taken time to listen, research and provide such a personal response.  Read what Dr Washer wrote yesterday to a newsagent:

Further to your recent correspondence regarding changes to EFTPOS that will affect your small business.

The big banks and big retailers will gouge another $40 million out of small businesses and family enterprises unless bank charges are reduced to offset new EFTPOS transaction fees sanctioned by the Gillard Labor Government.

Australia’s big banks continue to promote EFTPOS as a convenient way for account holders to access their funds.

But changes approved by the Reserve Bank will see this convenience come with new merchant transaction fees to fund the new standalone business that now runs the popular EFTPOS debit payment system.

The Coalition has called on the big banks to reduce small business banking costs and fees by an amount equivalent to the new revenues created by ‘spinning off’ EFTPOS to ensure that the creation of the new business is not simply a ‘cost shift and double dip’.

The decision by the big banks and big retailers to move its jointly operated EFTPOS payment system into a separate business with new annual revenues in excess of $40 million, will add to small business and consumer costs while relieving the current owners of operating expenses.

Having decided that EFTPOS is now less a banking and payment channel created out of self interest and more a separate service others should pay to utilize, spinning off this activity should be accompanied by a cutting out of the banking costs that had previously underwritten its operation.

Unless the planned new transaction fees are fully offset by reductions in business banking fees, the creation of EFTPOS as a separate business will amount to an audacious cost shift and double dip.

A change to EFTPOS from an embedded business banking facility bundled into the banking service paid for by small businesses, to an explicit standalone service with its own transaction charges should rightly be accompanied by reductions in business banking fees and charges.

To not see a commensurate cost saving that offsets the new per-transaction EFTPOS fees will amount to a gouge on small businesses and consumers.

The Coalition understands the need for EFTPOS to be restructured to ensure that an Australian domestic, PIN debit product remains competitive and viable against the more expensive US-owned and more expensive MasterCard and Visa debit cards.

But clearly, the Gillard Labor Government has once again overlooked the impact of its decisions on small businesses and consumers. Under Labor small businesses are doing it tough. 300,000 jobs small business jobs have been lost under the Labor Government and the number of small business enterprises has actually declined by 18,500, particularly in the category of businesses employing 1 to 4 people, according to the latest ABS figures.

Without guaranteed offsets and savings to business banking fees and charges, setting up EFTPOS as a separate business will simply be a Gillard government endorsed further boost banking profits via another slug on cash-strapped small business and a further cost of living increase on consumers and households.

The Opposition has written to the Reserve Bank and banking regulator to seek assurances that transaction charge off-set conditions are a part of the EFTPOS licence approval and that small business banking fees will come down as a result of this popular payment channel being established as a separate business with its own merchant fee revenue.

Thank you for bringing this important issue to my attention.

Kind regards
Dr Mal Washer MP
Federal Member for Moore

I don;t quite see it as he writes.  Both sides of parliament are responsible for the regime we have with EFTPOS.  Both are responsible for delivering a fairer solution and demonstrating that they do care abut small business.

Click here for a copy of the briefing paper which the ANF has given permission to publish.

Click here for a copy of a letter developed by the ANF and which which you can personalise and send to your local member of parliament and senators for your state or territory.

Click here for a list of house of representatives members and here for a list of senators. With this information you can easily, call, email or write to your local parliamentarians and get them engaged on this issue.

I received calls from advisers to two politicians on Friday.  They wanted to talk about the EFTPOS issue and let me know that they are working to represent newsagent concerns.  One was from the office of a Labor MHR and the other from a Liberal MHR.  While neither had good news, that the issue remained on their agenda and that they were lobbying on behalf of newsagents and other small and independent retailers was good news. They each said they would continue to push for us.

A story published by the Courier Mail a few days ago shows how Woolworths is using credit card processing to define a point of difference.  Imagine what they will do when they can pitch they they don’t charge a surcharge for EFTPOS when we do.

Click here for a copy of the briefing paper which the ANF has given permission to publish.

Click here for a copy of a letter developed by the ANF and which which you can personalise and send to your local member of parliament and senators for your state or territory.

Click here for a list of house of representatives members and here for a list of senators. With this information you can easily, call, email or write to your local parliamentarians and get them engaged on this issue.

Bruce Mansfield, CEO of Eftpos Payments Australia Limited has been sending out the same letter to anyone who writes to him about the EFTPOS fee hike which will flow from recent EPAL decisions.   He has nothing new to say in this letter.  It is more spin designed to deflect attention from the role being played by his board which is controlled by the major banks, Coles and Woolworths.

The facts which Mansfield ignores are:

1. The 12 million Visa and MasterCard debit cards are dual cards i.e. also EFTPOS cards. They can be used in both networks depending on the cardholder pushing credit or check/savings.
2. The EFTPOS network has become more expensive i.e. 1.2B Transaction by 11 cents, 800M by 6 cents. I am flabbergasted by the claim of “net impact zero”.
3. The retailers can negotiate with acquirers challenging the acquiring margin, but how are they negotiating with issuers challenging the interchange fee? That is the one that was raised.
4. The acquirer and retailers have to carry the bulk of the investment to save EFTPOS from the Bankcard demise. Why do they get charged?

The conclusion remains that Bruce Mansfield serves the issuing banks sitting on his board to levy an ”EFTPOS tax”. It is a fee that banks now get to continue to issue EFTPOS functionality on their debit card. Unjustifiable and untimely. His best position, if he had the survival of EFTPOS at heart and if he could decide, would be to maintain the cost advantage of EFTPOS versus scheme debit cards.

I am grateful to Jost Stollmann of Tyro for helping develop this response.

Newsagents – this is a big issue.  You need to contact your local member of parliament to fight not only for your nut for all small businesses.  The mroe who raise their voice the greater the opportunity for action on this issue.

Click here to see a letter I received yesterday from my local member of parliament after he raised the EFTPOS issue on my behalf.  It is a letter to him from Bruce Mansfield, CEO of Eftpos Payments Australia Limited.  It is the same letter Mansfield has sent to others who have complained about this issue.

Mansfield peddles his spin beautifully, almost believably.  Oh, it is not us.  And … newsagents have control.  No, we don’t.

In the letter, Mansfield says that newsagent can mange the mix of transactions and through this the EFTPOS fees.  He clearly has not spent any time working in a newsagency.  If he had he would not have made such an ignorant statement.

Alan Tudge, The Federal Member for Aston, the electorate covering one of my newsagencies has responded on the EFTPOS issue.

I appreciate how this can affect a small business like yours in a significant way. I do not know if there is anything that the government can do about it if the company is actually legally. There may be ACCC issues or other issues that I have not considered. I will approach both the Minister and Shadow Minister in relation to your concerns and seek their action on it.

The more newsagents who engage on this issue the greater the chance of it getting the necessary attention to affect change.  Have you written to your local member of parliament?

Newsagents who have not taken action to protest the move by the banks and Coles and Woolworths to rip small and independent businesses off on EFTPOS fees need only read the report in The Australian this morning.

If you remain silent on this issue you are supporting the rich banks and helping them get richer.

I have written to four four Senators and two members of the House of Representatives.

Please, get engaged and share with us your feedback.

It is good to see Mark Dreyfus QC, federal member for Isaacs, has engaged on the EFTPOS issue following representations from a newsagent in his constituency.  Click here to see Dreyfus’ response and a letter he has sent to the Treasurer.

The more newsagents engage on this issue the greater the opportunity for a positive outcome.

It would be good to see more newspaper publishers engage in support of newsagents on this issue.

Brett Carey of newsXpress Deception Bay was just on Brisbane local ABC radio debating the head of EPAL on the issue of EFTPOS fees and representing the newsagent perspective.  More newsagents could engage on this issue and have the voice of small business better represented.

Click here to get the audio coverage.

Click here to see a letter from Steven Ciobo to a newsagent responding on the EFTPOS issue.  I am interested in the proposal to tie consideration of action the the EPAL licence.

ATTENTION NEWSAGENTS – the more you engage with your local parliamentarians, the greater the opportunity to get the attention necessary of those in a position to help our position.

I had a good discussion with an advisor to a local member of parliament today who asked excellent questions on the EFTPOS issue.  He was well across the issue for small and independent businesses like newsagencies and was working on a strategy to get the issue in front of the right people.  He gets the challenges for small business people in this.  He will also talk with the ANF before developing a briefing paper.

Dun & Bradstreet has picked up the push by the ANF, newsagents and COSBOA for justice and fairness for small business on the EFTPOS fee issue.  See their news report here.

The Courier Mail yesterday covered the looming EFTPOS fee challenge from a newsagent’s perspective with a story featuring Brett Carey from newsXpress Deception Bay.

Politicians on all sides have played a role in what has created the opportunity for the expected EFTPOS fee hike against small business.  Politicians on both sides need to facilitate a solution.