Independent supermarkets baulk at new EFTPOS charges as RBA proposes limit on credit card surcharges

The independent supermarket industry has balked at the onset of new EFTPOS charges, saying charges that are set to be passed on could put independent retailers at risk of collapse.

The warning comes as the Reserve Bank said yesterday it is in the final stages of consultation with regard to new regulations for credit card surcharges, hinting that a new scheme would see retailers restricted in how much they can charge customers for using a credit card.

Chairman of the Independent Grocers of Australia, Mark Crutcher, has said the industry has learned charges are to be passed down to retailers instead of absorbed by banks.

“When these changes were first announced we objected but were told the full charges were unlikely to be passed on and it would not happen for some time.We now learn that the full charges are to be passed on and this will happen in several weeks, not months,” he told Franchise.net.

“I have members who stand to lose hundreds of thousands of dollars with this change and be forced to pass this extra cost onto the consumer.”

The changes were first introduced last year. From October 1, small businesses are being charged an interchange fee by banks of 5c for every EFTPOS transaction valued at more than $15.

Previously, the consumer’s bank paid a fee to the merchant’s bank, and retailers were actually paid for these transactions. Now, they’re being charged.

The retail industry said at the time banks should absorb the costs, rather than passing them on to retailers. The Commonwealth Bank said at the time it would absorb the costs but now Crutcher says costs are set to passed down.

“I really do not know how some of the small retailers are going to survive yet another huge impost like this. It is simply not fair that the rules and charges constantly change, it is no wonder people are leaving the industry.”

“We have been told that the EFTPOS system is expensive to run and needs to be overhauled.So why not work with us and negotiate a solution rather than impose a solution that will potentially cripple the independent sector and make the big chains bigger? It is time for common sense,” Crutcher said.

Meanwhile, the Reserve Bank has hinted new regulations will stop businesses from charging excessive surcharges on customers for using credit cards.

The RBA has been debating changes to the surcharge system for some time, with industry groups submitting proposals and their own plans for how the system should work. Now, RBA assistant governor Malcolm Edey said yesterday a draft revision of standards is now in the final stages of consultation.

This proposal would limit how much a business can charge customers.

“If adopted, the revised standard will allow schemes to limit surcharging to a reasonable cost of acceptance, but schemes will not be able to prohibit surcharging altogether or prevent merchants from recovering their costs,” he said.

“For this purpose, the cost of acceptance will be defined as including, but not being necessarily limited to, the merchant service fee.”

Edey said the proposal would also allow providers to take action against businesses that used excessive surcharges. “It will be in their own interests to make use of this power,” he said.

“It strikes a reasonable balance and it should strengthen the incentive for schemes to compete in lowering their fees to merchants…The less a scheme costs to merchants, the lower will be the permissible surcharge.”