Retailers Slam Dirty Card Tactics
Sydney Morning Herald
Monday April 1, 2002
Retailers have accused banks of lifting fees for credit card terminals in order to subvert the Reserve Bank's proposed reforms aimed at making the electronic payments system cheaper, more competitive and transparent.
The Australian Retailers Association's (ARA) policy director, Stan Moore, said at least one major bank was charging new business customers two to three times the current ``merchant service fees" in what he described as ``pretty close to unconscionable conduct".
``We have already got some examples that the banks are anticipating the RBA's proposals and have devised ways to maintain their current profit levels," Mr Moore said.
Without such fee increases, it is expected that banks would lose about $500 million in revenue from the RBA's proposed cut in interchange fees.
Interchange fees are the wholesale fees charged between banks to process credit card transactions but in turn passed on to merchants (in the form of merchant service fees for terminals) and in turn consumers (in retail prices).
Merchant service fees are generally up to 2 per cent of the value of the transaction, depending on the type of card.
The banks claim the reforms, which they are opposing, would result in increased credit card fees for consumers and would only deliver a windfall to retailers.
The ARA's allegations are referred to in its public submission to the RBA's credit card reform consultation document.
The retailers association, which represents 11,000 shopkeepershas kept parts of its submission, including the name of the big bank, confidential.
Apart from charging two to three times the current merchant fee, the unnamed bank had also levied establishment and line fees for the terminals, fees for cancellation of the agreement and debit card transaction fees that were four to five times the norm, according to Mr Moore.
The businesses affected had been start-up retailers or retailers who had decided to introduce EFTPOS facilities, rather than existing customers, he said.
``The answer is to move quicker with the reforms and get some transparency into the marketplace," Mr Moore said.
But Australian Bankers' Association chief executive David Bell said there was plenty of competition if retailers were aggrieved with their bank.
``There's nine acquirers [or the banks that owns the merchant facility]. That to me signals a lot of competition.
``If someone was being asked to pay this amount of money surely they would go to the other eight acquirers," Mr Bell said.
The ARA supports the RBA's reforms but argues that interchange fees should be abolished and merchant service fees should not be levied as a percentage of the value of each transaction.
The banks are likely to lift their campaign this week via an open letter to the RBA signed by chief executives of regional banks.
© 2002 Sydney Morning Herald
