Woolworths act to cut debit card costs
In the wake of the global financial crisis, many customers have turned away from buying things on credit, choosing instead to use debit cards that act like credit cards, such as Visa debit or Mastercard debit.
Many new bank accounts are also offering these debit cards as standard, instead of the traditional EFTPOS card.
This increased use and promotion of scheme debit cards means retailers are now facing higher bank fees and growing cost pressures. This is because when purchases are treated as credit purchases – whether from a credit card or debit card – and are thus processed by Visa or Mastercard, the retailer is charged a fee.
Woolworths has announced they are taking action to reduce this growing cost, by having customers using debit cards choose the Cheque or Savings button rather than credit. This means the transaction will be processed via the EFTPOS network, rather than by Visa or Mastercard, avoiding the fee.
Woolworths Limited Finance Director, Tom Pockett said “The bank fees from processing debit transactions via MasterCard and Visa adds significant costs to the Woolworths business. By processing transactions through the Australian EFTPOS network, we can keep our costs low enabling us to deliver increased value to our customers,” Mr Pockett said.
“Regardless of which button customers press they still access the same bank account. The charges associated with the scheme debit networks are simply an unnecessary layer of costs for retailers that eventually trickle down to the consumer,” he said.
“By moving all debit transactions to the EFTPOS network, we can continue to be
one of the few national retailers not applying surcharges to any card transactions,”
Mr Pockett added.
In New Zealand, merchants process all debit transactions through the domestic EFTPOS network to keep transaction costs low.
Mr Pockett said the change is unlikely to cause inconvenience to customers as most scheme debit users already press cheque or savings to access their funds.
“Customers will need to ensure they know their PIN to access their funds via the cheque or savings buttons. The PIN customers use in-store is the same number which customers use to withdraw funds at an ATM,” Mr Pockett said.
Customers who do not know their PIN can contact their bank for assistance.
“The EFTPOS network is a secure and real-time payment network which is admired around the world. It’s important that Australian retailers support the Australian EFTPOS network to ensure we have a competitive, innovative and low cost network benefiting both retailers and consumers into the future,” Mr Pockett added.
The announcement initially caused some confusion, with some media reports stating that Woolworths Limited was banning or surcharging the use of Visa Debit and MasterCard Debit cards in its stores.
Woolworths Limited are keen to stress that they will continue to accept Visa Debit and MasterCard Debit cards at all stores within the retail group across Australia.
The only change for customers using Visa Debit and MasterCard Debit cards will
soon be the need to press either the ‘cheque’ or ‘savings’ buttons to access their
funds.
Credit cards will not be impacted by this change and customers will still be able to
select ‘credit’ when using a credit card.
Regardless of which button customers press they still access the same bank account.
The change, which is likely to only affect less than 1% of Woolworths’ customers,
will be introduced progressively across stores in the Woolworths group.
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That makes sense – best of both worlds. Good for customers who only need to worry about one card and saves Woolie’s paying unnecessary fees.
Let’s be honest, they are banning Visa Debit and MasterCard Debit cards – because you won’t be able to use that function any more.
We’ve the Reserve Bank to blame for this, and their changes to the card processing system that were supposed to bring about competition. They’ve not, and made it more expensive for consumers – and removed the very protections which stopped companies gouging consumers for the cost of service, and would have stopped Woolworths from pulling such a stunt.
Woolworths should be bloody grateful when people choose to pay by card, as it means they receive the money instantly, and don’t have to invest in complex cash reconciliation and handling solutions. If anything, cards of any creed or colour are of benefit to the business.
The message being sent out to holders of the everyday money credit card is the direct oppopsite of this, we are encouraged to use our credit cards for all our purchases at wollworth and partner stores in order to boost our loyalty points. What kind of loyalty programme will there be if we are now encouraged not to use our cards to recieve double loyalty points??
Everyday Money is a CREDIT card, not a Visa debit or Debit Mastercard.
I have a Debit Mastercard and as it is I press SAVINGS, it all comes from the same account and also means I can get cash out.
I think most people are actually missing the point here, the cost that was previously met by Woolworths will actually now be met by you, if you have used your fee free transactions for the month. The Visa debit (visa function -vpressing credit on EFPOS) meant that this transaction was not included in the number of ATM / EFPOS transactions the bank allowed prior to charging fees for excess use. If this will only effect 1% of customers why do it?. I for one will be using my actual credit card from here on, and just transfer the amount directly via the net, as net transactions do do count towards bank fees (YET)
And for the sake of saving a reported 6.6 cents per transaction, Woolworths are willing to inconvenience their customers. In my case, they have lost one who on average spent approx $1000 + per month in their stores.
Their ‘;bans’ on using the credit option restrict me from using my card for online purchases and from spending more than $1000 per day (the limit that my financial institution places on eftpos withdrawals. If I want to buy that flat screen televison I have been looking at, it won’t be from Dick Smiths or any of their other retailers.
Small businesses are charged much more than major retailers for using merchant facilities, yet most continue to do so for the sake of customer service.
I wrote to Woolworths about my concerns but it was obvious from their reply that they value their new policy more than the custom of Debit credit card holders.
Goodbye Woolworths. Despite your loyalty program, I will not be shopping at your supermarkets, retail outlets, online stores or service stations again.
I won’t be shopping at Woolworths anymore, or Dan Murphey’s or any of the other stores that are dropping the VISA debit option.
I get charged by my bank for more than 8 EFTPOS type transactions per month and the VISA Debit option I use all the time because it’s free.
Woolworth’s have just lost my business….
Josette Dunn needs to tell the whole truth.!
You forgot to tell people about the Transaction fee / Kickback that Woolworths gets from the use of our credit card transactions.
My 6.6 cents cost on a $300 buy means that woolworths is complaining about .022%.
Woolworths says 1% of the transactions are Debit.
They are getting Kickback fees from the 99%
We are already shopping at Coles!!
Was wondering how online shoppers were supposed to purchase their goods if they only have access to a visa debit card. Woolies are loosing customers, they just lost me. I will be informing everyone I know.
Most of the ANZ and CBA debit cards charge 50cents for EFTPOS transactions whilst NAB and Westpac ones don’t. You might also consider an ING Direct Orange Everyday account which will pay you 50 cents if you withdraw $200 or more when you use EFTPOS.
Woolworths have lost me as a customer because this. I run my own business and use a debit card. I don’t press Chq or Savings. I was spending $400 a week. Wake up Woollies.
Well you guys would be all hungry now considering just about everyone , has this function now including coles lol
Personally, I like to save, then spend so a debit card is perfect for me. I had $2000 set aside for a new entertainment system I had eyed at Big W. I was also going to put down another $500 for a new laptop computer. So, I transferred my funds to my debit card, and went in store. Imagine my annoyance when I was told I had to pay EFTPOS or cash. This was impossible– EFTPOS has a daily limit of $1000 dollars. It would take me 3 days to get cash out to do this and buy the items I wanted! Basically, I had absolutely no means of buying the items that day even though I had more than enough money!
All because Woolworths didn’t want to pay the 6.6 cents on my 2500 dollar transaction. Boo hoo, Woolworths. I’m sure that 6.6 cents was well worth saving. Oh well. Myer happily accepted my debit card, and they gave me a $40 voucher for my trouble, too.
People will say, ‘oh well, increase your EFTPOS limit or get a credit card,’ but that is not ideal. Firstly, I would be unprotected if someone went to town with my EFTPOS card, especially if I increased my limit. Not so for using the credit network. Secondly, credit cards and EFTPOS cards have limits. With a debit card, I can save 14k, then use that card to buy a car even. If I wanted to do that with a credit card, I’d need a gold account or something impossible on my current pay. I can only get a basic account.
Lastly, can’t buy from Woolworth’s online anymore because of this– again I don’t own a proper credit card, and they refuse to accept my Visa Debit card. Therefore, I can no longer buy online because EFTPOS transactions are not accepted. Oh well. Coles accepts them still.
Debit cards are a good idea. The benefits of them outweigh the fees on them. They are a good idea for the economy too; people getting into debt is unlikely with them– spending outside our means is actually causing a lot of financial problems.
I wont be shopping at Woolworths or its petrol stations any more. They wont accept debit cards without a saving(eftpos) function. My Salary Packaging visa card has a credit only option along with an alternative debit card i have which too only has a credit option. Not impressed.
Well if someone is with Commonwealth Bank they can pay only 4 dollars a month and get all the eftpos transactions included at no extra fee. I do not understand why people complain about this and im sick to death of people going up at me at work over it..
I will be switching to Coles and Aldi from here on because it costs me an additional $1.50 for every EFTPOS transaction I make via my Credit Union. If you add up the number of times I buy stuff at a Supermarket each week then that adds up to nearly $20 extra dollars that I really can’t afford to waste.
Greedy Woolworths deserves to be put out of business as they certainly don’t care about their customers – just their current monopoly of the market.
I do not have a PIN for my card as this makes it more secure. Any person found trying to use my card will need to sign for it for purchases over $35. Any purchases under $35 will be easy to get back off the bank if I didn’t make them because the retailer cannot prove without a signature or PIN that I used the card. This has happened before.
My wife does the shopping for the most part and mostly I just get cash off of her for myself.
The other day I went to Safeway in Horsham and felt that I was being persecuted for not having a PIN. I was unable to buy nappies and milk for my children as I had no cash. Upon querying why I was told that the fees were to high. And I should try Coles to see if they would access my card. Which they gladly took my money with a smile. And then Dicksmith’s also would not take my money so I was forced to go into the bank to take money out.
Woolworths should be ashamed at this terriable act and I will boycott all stores that are owned or affiliated with the Woolworths group. My parents will also be doing this and encouraging their friends and the rest of the family to do so too. I work In retail and we pay 0.5% fees on all credit transactions and 70c for Eftpos.
So $14 would have cost woolworths 7c. But it lost a lot more than that.