Eftpos changes to be 'felt at the register'

CONSUMERS could be slugged more at the cash register due to a rise in eftpos transaction fees, the nation's peak small business group warns.

CONSUMERS could be slugged more for everything from fruit and veg to the latest designer fashions due to a rise in eftpos transaction fees, the nation's peak small business group warns.

From October, the way eftpos transactions are structured will change, so that merchants' banks will be charged a 5 fee when a customer uses the electronic payments system.

This will reverse an existing arrangement whereby a cardholder's bank pays a 5 fee to the merchant's bank for each transaction.

The Council of Small Business Organisations of Australia said consumers would likely end up bearing the brunt of the new fee, as retailers struggled amid tough trading conditions.

"Some people will build it into their costs, while others will take the option to say, 'Well, if you use a card you've got an extra 3 per cent or 5 per cent added to the cost of the transaction','' executive director Peter Strong said.

"It's indicative of the whole problem around retailing - the dollar's up, people aren't spending, internet costs are impacting, and now the fee is going up on the credit card charges.''

Under the proposed changes, Eftpos Payments Australia Limited (ePal), the company established to manage the eftpos debit payments network, will charge merchants' banks a 5 fee for all eftpos transactions over $15.

Transactions relating to charities, Medicare Easyclaim and purchases of less than $15 will be exempt, as are payments made at Coles and Woolworths.

Mr Strong said most small businesses, many of which were struggling just to stay afloat, would be unable to absorb the higher transaction costs. Retail sales fell 0.1 per cent in June, seasonally adjusted, after a 0.6 per cent fall in May.

Meanwhile, a key indicator of consumer sentiment, the Westpac- Melbourne Institute index, has fallen to its lowest level since the global financial crisis three years ago.