Retailers may be affected by increased merchant fees after EPAL announced higher interchange fees
Jewellers set to be affected by higher EFTPOS fees
Posted March 15, 2011 | By Sonia Nair
Jewellers have been urged to negotiate with their banks to shoulder increased merchant fees after EFTPOS Payments Australian Limited (EPAL) announced higher interchange fees last week.
Australian Retailers Association (ARA) executive director Russell Zimmerman said, “It will impact all retailers, including jewellery retailers, who do a large volume of transactions.”
“It will impact jewellery retailers especially when their customers pay for ring repairs, watch repairs, cleaning costs, deposits and lay-bys using EFTPOS,” Zimmerman added.
Under the new system, there will be a new 5 cents interchange fee for standard point-of-sale transactions of $15 or more. For transactions below $15, there will be no fee and retailers will get 15 cents for each cash-out transaction they perform.
The new system replaces the old one where retailers and their banks received a rebate of approximately 5 cents per EFTPOS transaction.
Zimmerman slammed the decision and said the increased interchange fees would impact the merchant service fees that retailers pay on each transaction at present.
“Small retailers in particular should not be expected to cop increased interchange fees from banks that are posting giant profits, especially because they don’t hold the same bargaining power as larger retailers when negotiating with their banks, nor do they have the time and resources to try,” Zimmerman said.
Zimmerman claimed the new fees would worsen the situation for many retailers who “have been struggling with poor trade for over 18 months and now face more months of frugal customers tightening their belts”.
Consumer confidence took a dip according to the Westpac-Melbourne Institute Index of Consumer Sentiment released last week. Consumer sentiment fell by 2.4 per cent to 104.1 in March, the lowest it has been since June 2010.
Westpac attributed the weak results to rate hikes by the Reserve Bank, escalating petrol prices and concerns about budget as well as taxation policies.
EPAL defended its decision by saying that the new interchange fee would increase the competitiveness of EFTPOS payments against Visa and MasterCard debit cards. EPAL managing director Bruce Mansfield pointed out that the interchange fee for EFTPOS was still less than that for credit card payments.
“The new 5 cent interchange fee for standard point-of-sale transactions is less than half the equivalent fee of 12 cents payable for international scheme debit cards [such as] Visa and MasterCard,” Mansfield said.
Zimmerman conceded that EFTPOS transactions were important to prevent a duopoly between Visa and MasterCard. However, he reiterated the need for retailers to either negotiate with their existing banks to shoulder the added costs or to switch banks if necessary.