COMMUNITY TO BENEFIT FROM ACCC EFTPOS DECISION Sydney, 11 December, 2003: Banks, Building Societies and Credit Unions welcome the Australian Competition and Consumer Commission’s (ACCC) decision to approve their proposal to reduce EFTPOS interchange fees to zero. Consumers, retailers and the wider community will benefit from the ACCC decision.    The reform will mean EFTPOS interchange costs will no longer be covered by EFTPOS card users.   This EFTPOS decision is the second component in the Reserve Bank’s comprehensive retail payments systems reform programme. The first stage was credit card reform which saw retailers benefit from a significant cut in interchange fees.    While retailer EFTPOS transaction fees may rise as a result of this decision, credit card interchange savings will more than offset any EFTPOS cost increases. This means that merchants can still reduce prices for their goods and services.   Indeed, the ACCC notes that “retailers and the Australian public will benefit from significantly enhanced competition between providers of payment instruments and payment services.”   Comprehensive reform ensures the community benefits from a more efficient and fair payments system. Amongst the public benefits of zero EFTPOS interchange, important components of the reform programme, are:   1. Downward cost pressure for users of EFTPOS, driven by market competition, and improving  relative price signals;   2. Greater transparency in pricing; and   3. Greater flexibility in setting future EFTPOS fees.   Banks, Building Societies and Credit Unions continue to strongly support the access reform initiative by the Australian Payments Clearing Association (APCA) which is also supported by the Reserve Bank and representatives of the consumer movement.   Notes for editors:   1.      Background on EFTPOS interchange reform process:   ·        The ACCC along with the Reserve Bank started the process to reform debit card systems in October 2000 when it found in the Joint Study that: “The study has not found a convincing case for an interchange fee in the debit card network in Australia…” ·        The reform results from the work by the EFTPOS Industry Working Group, convened at the request of the Reserve Bank, and comprised of institutions involved in EFTPOS interchange including Banks, Building Societies, Credit Unions, a payments system provider and a retailer. ·        The industry group issued a discussion paper in July 2002, then received and considered submissions from a wide range of parties interested in EFTPOS including various retailers and consumer groups.  The industry group’s discussion paper and submissions are available on the Reserve Bank website: www.rba.gov.au. ·        Formal approval, or authorisation, for the reform was sought from ACCC in February 2003 and a draft determination was issued by the ACCC in August 2003. ·        The parties to the ACCC application are: Australia and New Zealand Banking Group Limited, Australian Settlements Limited, Bank of Queensland Limited, Bank of Western Australia Limited, Bendigo Bank Limited, Cashcard Australia Limited, Commonwealth Bank of Australia, Credit Union Services Corporation (Australia) Limited, National Australia Bank Limited, St George Bank Limited, Suncorp-Metway Limited and Westpac Banking Corporation.   2.      Information on EFTPOS Interchange   ·        Currently, EFTPOS interchange fees are negotiated bilaterally between financial institutions – the debit card issuer and the acquiring institution.  The fees are a flat amount rather than a percentage value of the transaction. ·        EFTPOS interchange fees in Australia are paid by a debit card issuer (Bank, Building Society or Credit Union) to an acquirer (a merchant’s financial institution or, if it has the necessary links to issuing financial institutions, the merchant itself) when a cardholder uses a debit card to make a purchase or withdraw cash from a merchant. The ACCC/Reserve Bank study found that the direction of interchange fees in Australia is unique. ·        The Reserve Bank has estimated that the total amount of EFTPOS interchange fees paid in Australia in 1999 was in the order of $100 million – between 18 and 25 cents per transaction.     For further information: Heather Wellard  ABA Public Affairs  Phone: 02 8298 0411  Mobile: 0409 830 439   Louise Petschler  CUSCAL Public Affairs  Phone: 02 8299 9046  Mobile: 0408 239 226   John Toms AAPBS Phone: 02 6281 1588 Mobile: 0419 000 206    ENDS