Dick Smith defends debit card decision

Woolworths subsidiary Dick Smith Electronics has defended the company's decision to reject payments on Visa Debit and Debit MasterCard networks.

On April 1, the Woolworths Group announced that customers with the so-called 'scheme debit' cards would no longer be able to access their funds via credit card networks.

Instead, payments would be routed through the EFTPOS network with the card's cheque or savings option, allowing Woolworths to avoid Mastercard and Visa fees.

The change was implemented in all Dick Smith stores in late May.

When announced, the move attracted criticism from Visa and consumers, some of whom faced bank fees when accessing their funds through EFTPOS.

But according to Dick Smith spokesman Luke Schepen, "Customers have been very accepting of the change."

Schepen laid the burden of blame on financial institutions for any additional bank fees customers may incur through EFTPOS transactions.

"In many cases, these [fees] can be anything from $0.50 to $3.00, where the cost for them [financial institutions] is actually in the cents," he told CRN.

"Certainly, we would advise customers that there are financial institutions out there that do not charge for EFTPOS transactions."

Brad Schmitt, spokesman for consumer group Choice, said Woolworths had the right to encourage customers to use lower-cost payment methods, "but the way they went about it was wrong".

"It takes away consumer choice and makes a lot of customers angry, we've found," he said.

Instead of banning scheme debit card payments on those networks entirely, Schmitt said the group could have introduced a cost-based surcharge for purchases made on those networks.

According to Visa Australia's online fact sheet, 'credit' transactions on Visa Debit cards incur a fee of 4.4 to 6.6 cents for 'strategic', high-volume merchants.

Schmitt agreed with Dick Smith's Schepen that consumers should look to their financial institutions if they were concerned about being charged EFTPOS fees.

"I know Woolworths is getting a lot of flak for this, but the fees are an issue for the banks," he said. "If customers are being charged unreasonable EFTPOS transaction fees, then perhaps they should shop around for other accounts."

While he declined to disclose how much money the move has saved Dick Smith so far, Schepen said the Woolworths Group had spent "millions and millions of dollars on processing debit card transactions".

"We're looking at the long-term viability of the EFTPOS and debit card networks," Schepen said.

"From a retailer's point-of-view, these scheme debit charges ultimately add up to our costs, which ultimately get passed on to consumers."