Payment operator EFTPOS is considering raising fees to fund an upgrade of its debit card scheme, a move which rivals claim will hurt small retailers.
EFTPOS Payments Australia or EPAL, the company that manages EFTPOS, is in discussions with the major banks and retailers on a restructure of fees for use of the payments scheme.
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But rival Tyro Payments says small retailers might be forced to bear the brunt of the fee rise, which could translate to $250 million in additional costs for the sector.
According to Tyro, larger retailers are likely to secure a better deal because they can negotiate interchange fees directly with card issuers.
The EFTPOS system is coming under pressure from debit card payment schemes provided by global companies Visa and MasterCard.
These international schemes have higher interchange fees, which translate to higher revenue for banks that issue these cards instead of EFTPOS cards.
EPAL managing director Bruce Mansfield said yesterday talks on pricing are progressing but a decision has not yet been reached.
“Importantly, all participants understand the need for changes to underwrite the long-term future of EFTPOS to ensure a competitive and viable payments industry in Australia,” Mansfield said in a statement.
Mansfield said any changes in pricing would be “carefully calibrated” so that EFTPOS remains the most competitive payment system available to Australian retailers, suggesting it would continue to be priced below the Visa or MasterCard scheme.
But Jost Stollman, chief executive of Tyro Payments, says the changes will cost the Australian merchant community in the order of a quarter of a billion dollars in additional transaction fees, based on two billion EFTPOS debit card transactions per year.
“The major banks and the biggest retailers are in negotiations with EFTPOS Payments Australia to reverse and increase the EFTPOS interchange fee from the current merchant-friendly average rate of -4 cents to 4 cents [and] possibly up to 12 cents,” he says.
“This increase of the average cost per EFTPOS transaction by up to 17 cents would pass to the card-issuing banks.”
The news comes as EPAL reports it processed more than one billion transactions in the December half, representing approximately $65 billion.
Mansfield says EFTPOS is the cheapest, safest and most convenient debit payment platform, preferred by both merchants and consumers.
“As we expand EFTPOS in the near future to include a comprehensive chip card solution and related infrastructure, its position as Australians’ preferred debit option will strengthen,” he says.
“Changes to interchange fees will support our investment in the accessibility, security, convenience and efficiency of EFTPOS.”