Aldi sues EFTPOS over new fee system

Discount supermarket Aldi has launched legal proceedings against EFTPOS operator EFTPOS Payments Australia Limited (ePal) in the Federal Court, seeking clarity around new EFTPOS interchange fees, and how costs might affect retailers and their customers.

(Numbers image by Declan Jewell, CC BY 2.0)

ePal announced plans in March for a new fee interchange structure that would see merchants charged an extra $0.05 per transaction, payable to the acquirer (the party collecting the money) for all point-of-sale purchases over $15, with an additional $0.01 payable to ePal itself.

ePal added that fees for transactions under $15 would be exempt, in a bid to eliminate minimum EFTPOS spend limits in stores, as well as transactions carried out by charities, and via Medicare EasyClaim. Supermarket giants Coles and Woolworths would also be exempt from the new interchange fees, thanks to a parent relationship with ePal.

ePal has previously said that under the new rules, set to be introduced on 1 October 2011, consumers would not foot any additional charges for spending their own money, unlike when they use credit facilities from Visa and MasterCard, which incur surcharges.

"The changes to EFTPOS include an incentive for retailers to accept EFTPOS for purchases under $15, potentially making minimum EFTPOS amounts a thing of the past, and will not result in any increase in consumer bank fees," Mansfield said in a statement in August.

ePal quickly back pedalled, however, after both Westpac and the National Australia Bank (NAB) said that the new interchange fees would see them increase their network operating costs for merchants by $0.10 for each non cash-out transaction over $15.

It told AAP that it was unable to provide concrete assurances that these increased network operation costs wouldn't be passed onto consumers.

"It remains to be seen whether acquirers will pass part or all of any fee changes on to retailers, and what retailers may do in relation to their consumers as a result of any changes," the EFTPOS operator said.

"It is therefore premature to state with certainty what impact the planned changes will have on retailers or then upon their consumers."

Discount supermarket Aldi has subsequently taken ePal to court in a case filed on 8 September, seeking clarification on the specific rules and charges to be encapsulated within the new system.

Australia's big four banks are also part owners of ePal, and Aldi has accused all involved of revenue raising by upping the charges for EFTPOS transactions.

"With over five million EFTPOS transactions per day across Australia, it is possible that these new fees levied on retailers and merchants could lead to the banking industry reaping substantial additional revenue each year," the supermarket said in a statement.

Aldi managing director Tom Daunt said that while he and his company support the new interchange fee model, the lack of transparency around additional costs is troubling.

"Aldi supports changes to the interchange fee model that improves the competitiveness of EFTPOS in the market, but is very concerned about the transparency of the changes and potentially unjustified fee increases levied by the banks on retailers beyond their additional costs," he said.

In its notice of motion submitted to the court, Aldi wants ePal to publish a clarification of all costs to be passed onto merchants as a result of the new interchange fee rules.

ePal told ZDNet Australia in a statement yesterday that it will defend itself against any such pursuit, reiterating the importance of the new interchange fee structure.

"Aldi has recently filed a claim against EFTPOS Payments Australia Limited (ePAL) in the Federal Court. ePal disputes the basis of Aldi's case, and will be defending its position vigorously.

"Planned changes to interchange fees are an important measure to strengthen the long-term competitive position of EFTPOS and its ability to continue to provide the payment method of choice for all Australian merchants and consumers," the company said.

The case was adjourned before the court yesterday, with the next hearing set for 21 September.