News

The RBA's strategic review of innovation in the payments system announced today must focus on how far the RBA's interventions have tipped the balance away from cardholders towards big merchants.

"Merchants have benefited by well over $5 billion since 2003 from the RBA's cuts to credit card and scheme debit card interchange fees," said Abacus – Australian Mutuals CEO Louise Petschler.

"According to the most recent annual report of the RBA's Payments System Board, the saving to merchants flowing from cuts to interchange fees is running at $1.2 billion per year.

"The biggest merchants, such as Woolworths, have benefited the most.

"The deepest cuts have been to scheme debit interchange fees. Scheme debit interchange fees on a $100 purchase have been slashed from 95 cents to around 5 cents for big merchants like Woolworths.

"Yet Woolworths is striking at consumer choice by turning off access to the Visa and MasterCard scheme debit card networks in its supermarkets, petrol stations and other stores. Woolworths has taken advantage of the RBA's changes to card scheme rules to force scheme debit cardholders to use the EFTPOS network.

"Woolworths is paid around 4 cents when its customers use the EFTPOS network so, to lock in this revenue, it has disabled the 'credit' button which provides access to the scheme networks for scheme debit cardholders.

"Abacus welcomes the RBA announcement today that it wants to identify areas in which innovation in the Australian payments system may be improved through more effective co-operation among stakeholders and regulators.

"We would like to see stakeholders like Woolworths show a stronger commitment to consumer choice. Credit unions and building societies support the EFTPOS system and we would like to see enhancements and innovation to EFTPOS but we will continue to offer our cardholders choice about how they pay at the checkout," Petschler said.