EFT-POS fee queried

Press, 20 February 1988, Page 27

EFT-POS fee queried

Westpac Banking Corporation considers that Trust Bank Holdings’ move to pay retailers 25c for each electronic funds transfer at point of sale (EFT-POS) transaction is an additional cost. Trust Bank Holdings announced the move on February 10, but Westpac’s electronic banking department chief manager, Mr R. C. MacFarlane, said that there was no such thing as a “free lunch.” Somebody must pay. If it was not the merchant then it must be the cardholder or through cross subsidisation in other parts of Trust Bank’s operation, he said. The four trading banks’ EFT-POS system, which includes Westpac, runs parallel to Trust Bank’s Cashline EFTPOS service, but at present the two systems are not linked. Mr MacFarlane o.uestions whether the payment is being done to promote acceptance of EFT-POS. As recently reported, the

use and acceptance of EFTPOS had been good, and retailers had confirmed their willingness to install and pay for terminals, he said. Westpac considered that retailers had the most to gain out of EFT-POS compared with other “payment mechanisms.” This included a guaranteed payment, quicker transaction time, less transaction handling, and direct credit of funds, which reduced interest costs. The development costs of EFT-POS had been considerable, and had not been passed on to the retailer or consumer. The banks were moving towards meeting retailer and consumer group demands, including all cards being able to use one terminal, integration with cash registers, and establishing a code of practice and dispute procedures. In looking at the pricing of EFT-POS transactions, Westpac had not recovered these "sunk costs,” and the benefit to retailers and caredholders would be that prices related

to a mature system. Westpac recognised there were different costs for different situations, but questioned the necessity of actually retailers being paid for transactions, Mr MacFarlane said. The development of the EFT-POS system had been considered in the long term, and Westpac questions whether the payment of transaction fees could be sustained. Any payment to a retailer could only add to the cardholder’s cost in the long term. At the time that transaction payment was announced, Trust Bank Holdings said the reason for the move was to help retailers offset the service fee of having EFT-POS machines installed. The fee covers equipment, maintenance, stationery, and Telecom line charges. Trust Bank’s card services group manager, Mr lan Murgatroyd, said yesterday that the bank would study Westpac’s statement before making a reply.