Woolworths dumps Visa, MasterCard debit

Woolworths has announced that it would no longer accept payments through the Visa Debit and Debit MasterCard networks.

From 15 April, the change would be introduced progressively across Woolworths Group stores, including Big W, BWS, Dan Murphy's, Dick Smith, Tandy, Thomas Dux and ALH, as well as Woolworths and Safeway supermarkets, liquor stores and petrol outlets.

The move would require customers with the so-called 'scheme debit' cards to use the card's cheque or savings option, instead of credit, to access their funds at check-out counters.

By routing debit transactions through EFTPOS rather than Visa and MasterCard, Woolworths hoped to lower its fees and cost pressures from banks.

A Woolworths spokesperson told CRN that savings would be "in the millions".

"The bank fees from processing debit transactions via MasterCard and Visa adds significant costs to the Woolworths business," the company's finance director Tom Pockett said.

"By processing transactions through the Australian EFTPOS network, we can keep our costs low enabling us to deliver increased value to our customers."

Visa's ANZ general manager Chris Clark argued that the interchange rates for Visa Debit had "reduced dramatically in recent years".

According to Visa Australia's online fact sheet, each domestic Visa Debit transaction incurred a flat fee of 6.6 cents for supermarkets.

'Strategic merchants' that processed a high volume of transactions were charged fees between 4.4 and 6.6 cents.

"We don't believe that cost is an issue," Clark said. "To be frank, there's very little cost differential [between Visa debit and EFTPOS]."

Noting that EFTPOS had a 75 percent market share of debit card transactions, Clark said the move was "anti-consumer choice".

"It puts into question the competitive landscape for the entire payments industry when a major dominant retailer can decide not to accept a payment solution that is strongly supported by the public," he said.

There were an estimated five million Visa Debit cardholders in Australia, with scheme debit cards becoming increasingly popular since ANZ's introduction of its 'Everyday Visa Debit' in March 2006.

Banks including St.George and NAB offered Visa Debit cards, while the Commonwealth Bank and Westpac offered Debit MasterCards.

But Woolworths expected the change to affect only one percent of its customers, as most of its scheme debit users already chose to access their funds via the EFTPOS network.

Customers would be required to know their PIN to access their funds via EFTPOS.