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Small retailers slugged for interchange credit card fees

Large retailers are gaining volume discounts on credit card interchange fees, while small-medium-sized retailers including convenience stores are being slugged with much higher credit and debit card and eftpos ‘interchange’ fees than large national chains such as Coles and Woolworths.

This is happening under an interchange fee system that hasn’t changed much since 2006-08, regulated by the Reserve Bank of Australia. The RBA’s ‘Waiver of Requirement to Recalculate Interchange Fee Benchmark’, issued December 2011, continues until 2015-16.

Credit card fees were set at a benchmark 0.5% of the transaction value by the RBA and debit cards at 12 cents per transaction value.

Executive director of the Australian Retailers Association Russell Zimmerman said large retailers such as the two supermarket majors have a preferred industry rate and retailers now work on an average weighting cap (AWC).

He has called for a maximum cap so that smaller retailers pay no more than 50 basis points or 0.5% credit card interchange fees issued by Visa, Mastercard and American Express.

“Large banks working with credit card providers are dropping the interchange rate for the larger retailers,” Mr Zimmerman said.

“Interchange fee costs are higher for small retailers and smaller chains who pay more than 0.5% for these credit card fees, while the preferred merchant rate is only available for Coles and Woolworths.”

Premium Gold and Platinum type cards fees have gone up from 1.25% to 2.2% for all retailers, while small independents also may have to pay a blended rate for credit card interchange fees of 0.80% to 0.90% under AWC.

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