With access reform to the Electronic Funds Transfer at the Point of Sale network likely to go ahead, the Australian Competition and Consumer Commission has authorised* today a proposal by banks and others** to fix the wholesale fees for EFTPOS transactions at zero.
"In August 2003, the ACCC indicated it would refuse to authorise the EFTPOS fee proposal as, by itself, it would be unlikely to be in the public interest", ACCC Chairman, Mr Graeme Samuel, said today. "The ACCC believed the level of competition between EFTPOS providers was insufficient to ensure the sustained pass-through of cost savings to cardholders and was unlikely to result in competitive merchant service fees.
"The ACCC was particularly concerned that, in such an environment, the revised merchant service fees may disadvantage small businesses.
"The ACCC believes it now has a commitment that gives it certainty that the access reform will go ahead", Mr Samuel said. "The Australian Payments Clearing Association has provided assurances that it is developing an access regime as a priority. In addition a recent Reserve Bank of Australia submission states that should industry efforts to voluntarily reform access falter the Bank 'would seriously consider, in the interests of promoting efficiency and competition in the Australian payments system, designating the EFTPOS system' ".
In its draft decision the ACCC indicated that a way forward for the interchange fee proposal was a commitment to suitable access reform.
"Following the Reserve Bank's submission, the ACCC is satisfied that the EFTPOS fee reform is likely to result in a range of benefits to consumers, including lower cardholder transaction fees and improvements in banking services.
"This reform is also likely to promote EFTPOS as a cheaper payment alternative. It will address some inefficiencies in the Australian payments system, leading to savings for the Australian community as a whole.
"The reform is likely to mean increased fees charged to merchants for accepting EFTPOS transactions. But the ACCC is satisfied that competition will be improved in a timely manner through allowing access for new entrants to the EFTPOS network. This increased competition will constrain merchant service fee increases to small businesses".
EFTPOS reform is now in line with the Reserve Bank's credit card reforms, which tackled wholesale fees and access reform. It will mean that retailers and the Australian public will benefit from significantly enhanced competition between providers of payment instruments and payment services.
The ACCC's decision will be available from its website and will take effect from 3 January 2004 until 31 December 2006.