According to news articles I’ve seen cropping up this week, it looks like EFTPOS has implemented a new fee schedule. According to their press releases, these were actually first mentioned back in March and clarified in early September, so I’m not sure why there wasn’t more mention of it back then. Maybe I just didn’t notice.
In reading through the news articles and press releases, it seems to me like EFTPOS is spending money in the wrong ways. I’ve noticed their advertising campaign around this year as well about pressing CHQ or SAV and about how EFTPOS is the safest way and so many people use it, but the simple fact is, I rarely, rarely ever use it and that campaign hasn’t changed that. If retailers choose to pass on the new EFTPOS fees then I’m going to use it even less.
According to the press releases, ePAL keep mentioning their growth into the cash market and such, and their wording all seems to me like they are targeting cash as their main competitor. This doesn’t make sense to me. To me, it seems their main competitors should be Visa, Mastercard and American Express. These are the dominant players in plastic in Australia, especially Visa and Mastercard as they have debit card options available through many banks. These cards allow me to purchase online, or to sign for purchases if I can’t remember my pin, which happens given that there are 1 or 2 cards that I rarely use. If I use EFTPOS, I can’t purchase online and I must be able to remember my pin, if I can’t, then I have to use the credit card instead.
I certainly prefer to spend money directly from one of my accounts rather than credit, but EFTPOS just doesn’t make it as easy as they seem to think they do. Visa and Mastercard are much easier, especially with the new PayWave/PayPass technology.
From a merchant perspective, EFTPOS is certainly cheaper than credit cards. At Skate-Parts.Com it costs 1%-2.5% per Visa/Mastercard transaction depending on the type of card, plus 10c per transaction from the bank, plus a 50c transaction fee from the credit card gateway. So on a $100 purchase, that’s between $1.60 and $3.10. To accept American Express is slightly higher. According to the ePAL press release, this same transaction would be 5c. Under $15, say a $10 transaction, this would be between 16c and 31c for Visa/Mastercard and free with EFTPOS. There is a big difference there. Unfortunately though, EFTPOS is not available for online transactions or I would jump at the opportunity to accept it. Debit Visa and debit Mastercard’s can be used online though, which means the closest thing available to EFTPOS is a bank transfer, which is not as easy or convenient at all. I don’t really accept cash either. Even in our shop we don’t accept EFTPOS, because we would need to run a second terminal and this isn’t cost effective at present, and we don’t really do much cash there either. So there is not really any cash for EFTPOS to compete with. Only Visa and Mastercard debits.
I also see the move as a bit anti-competitive given that the fees, to my understanding will not apply to Woolworths and Coles, both of which are part of the consortium that makes up ePAL, and both of which who control an enormous part of the retail market in Australia across a diverse range of markets. Due to their ability to purchase at substantial bulk discounts they already have a competitive advantage over small businesses. By not having this fee applied to them, it puts them at an even greater competitive advantage. If however it simply means that Woolworths and Coles will not be passing fees on to customers than this is fine, but if they don’t have the fees at all, that hardly seems fair to other businesses.
Despite information indicating growth in the EFTPOS market, this move seems like it’s an attempt to extract money from the technology without really improving the service or providing any benefit to customers or merchants. The only benefit that I can see is to those behind ePAL, the banks and the retail giants Coles and Woolworths.
If the move included measures for online transactions, I think this adjusted fee scheduling would make much more sense. At this point though, I can’t even see any indication that there has been any thought go into making EFTPOS available online.
What do you think? What do you use more? EFTPOS or debit Visa/Mastercard? I’d love to hear some other perspectives on it!