Commonwealth Bank to absorb interchange fees for existing customers as new EFTPOS fee regime begins

Small business says it was business as usual over the weekend as changes to EFTPOS fees kicked in, but business owners are expected to speak with their bank managers down the track to see how to best absorb the changes.

ANZ said this morning it had not yet finalised its position in relation to changes to the interchange fees.

National Australia Bank flagged some “minor increases to EFTPOS merchant fees.”

“For the majority of small and medium business merchants the ePAL fee changes will result in an increase of less than $1 per week (approximately $42 per annum),” NAB said. 

“We have worked hard to minimise the impact to our merchant customers, and therefore will not be passing on the full impact to our customers.  NAB is committed to providing a competitive offer to our merchant customers.”

Westpac was contacted for comment this morning, but did not respond before deadline.

This follows an announcement from Commonwealth Bank of Australia that it will not increase fees to existing merchants customers, although new customers will bear half the cost. CBA says around 160,000 businesses would benefit from its decision.

From October 1, small businesses are being charged an interchange fee by banks of five cents for every EFTPOS transaction valued at more than $15.

In the past, the consumer’s bank paid a fee to the merchant’s bank.

Exemptions are in place for transactions relating to charities, Medicare Easyclaim and purchases of less than $15.

Peter Strong, executive director of the Council of Small Business of Australia, reported “no change” to his business operations over the weekend, but flagged a discussion with his banks as the costs roll in.

“There are hopes that banks will deal with this issue fairly,” Strong says, referring to CBA’s announcement.

COSBOA has warned that prices will need to rise under the change, with many businesses unable absorb extra costs.

Retail lobby group the Australian Retail Association concurs it’s too early to tell how the changes will play out, with members likely to be keeping an eye out on their November bank statements.

The new scheme has been criticised for excluding customers of Woolworths and Coles, given the supermarket giants are part-owners of ePal, alongside banks and credit unions.

Last week, EFTPOS-owner ePal was forced to concede that changes to EFTPOS might lead to many retailers facing increases charges after German supermarket giant Aldi won a court case over ePal’s comments that “Australian consumers should not face new charges following planned changes to EFTPOS interchange fees”.

The court found statements made by ePal on that topic to be misleading and deceiving, and ordered ePal to make clarifying statements and to pay Aldi’s costs.

The changes come as credit companies complain that retailers are charging consumers too much for credit card usage, with the Reserve Bank looking into capping the fees retailers charge customers for using credit cards.

According to The Australian newspaper, Visa has drawn attention to surcharges that “go beyond a merchant recouping the genuine costs of accepting card payments” while Mastercard has accused merchants of surcharging “well above their cost to accept card payments” and using those excess surcharges to “subsidise their business operations.”

According to a new research note by the financial research company East & Partners, while debit cards account for 40.5% of merchant receivables market wide, Visa and MasterCard credit cards continue to be the most widely accepted payment methods.

“East & Partners’ analysis continues to show that the cost of processing is the main influence on payment acceptance decisions for more than 70% of the merchants, another key driver of both debit and EFTPOS,” the note says.