Eft: Competitive Boost For Small Business

Small businesses are set to receive a competitive boost with reforms from the Australian Bankers Association (ABA) levelling the EFT playing field.

Under the new reforms large corporations including Coles-Myers, Woolworth’s and David Jones are expected to lose 80 million dollars in EFT interchange fee reimbursements.

The fee will increase by around twenty cents per transaction for the companies, bringing the larger corporations onto a similar par with the smaller businesses.

The Retailers Association have expressed concerns that the EFTPOS reforms may mean higher prices for consumers, but the Australian Consumers Association say this wouldn’t be a good move for the big businesses.

"They could pass the fee onto customers, but that would put them in further competition with the smaller business", said ACA’s Catherine Wolthuzen.

The Australian Bankers Association (ABA) say the new reforms will benefit merchants three to one on their possible EFT loses and any price increase would be from retailer exploitation.

"All retailers will be making lots of cost savings on these reforms. Whether they pocket those savings or pass them off to the customer is up to them", said Heather Wellard of the ABA.

The reforms include several credit card amendments lowering transaction charges for all businesses by around 40 per cent and increasing the accessibility of more cards; an amendment that would directly benefit the independent merchants.

"Smaller retailers are disadvantaged by the system at the moment… especially with credit cards because they charge in percentages and the small retailers have limited negotiation powers with the banks", said Ms Wolthuzen.

The proposal for reform began in 2000 when the ACCC along with the Reserve Bank of Australia (RBA) published a study saying they had ‘not found a convincing case for the interchange fee’, that was resulting in the large corporations receiving the EFT reimbursements.

The ACCC expect the ABA reform proposal to be in by the end of the week.