BELLA VISTA, New South Wales - Australia??s biggest retailer has taken on the role of David versus the Goliath Visa over interchange fees, The Australian reports.

In April, Woolworths announced it would no longer process debit card payments as credit transactions. The retailer also would route all scheme debit transactions via the Eftpos network, bypassing MasterCard and Visa.

"We know this move is confusing for some of our customers, but the simple fact is every time that credit button is pushed, it sets off a chain of events that hurts small retailers and adds another level of cost that has to be passed on to the end consumer," said Tom Pockett, the company??s finance director.

"Certain people talk about Woolworths?? decision in terms of limiting a customer??s right to choose. But the reality is that scheme debit is a Hobson??s choice as the financial institutions still eventually reap the rewards either directly or indirectly," said Pockett.

The move allows Woolworths to avoid adding a surcharge to customers using scheme debit cards. By using a debit card on the Eftpos system, Woolworths pays a fee of 4 cents; using a debit card on the MasterCard of Visa system ups that fee to between 8 and 12 cents.

Woolworths has not yet added surcharges on plastic payments, one of the few remaining national retailers to do so. Many smaller businesses, such as convenience stores and gasoline stations, assess additional fees to pay for card transactions. Most small retailers also pay even more than Woolworths for scheme debit transactions.

"I think Woolworths have taken the view that if they don??t turn the button off, then in the long term we won??t have an Eftpos system and everyone will end up paying a lot more for transactions," said Russell Zimmerman, executive director for the Australian Retailers Association. "The issuing side of the bank is pushing scheme debit cards on to customers, and telling them to press the credit button, so that they get the money."

In the United States, industry numbers estimate that Visa controls 85 percent of all debit payments with Eftpos holding onto a small sliver of the rest.

For information on U.S retailers and the interchange fight, visit nacsonline.com/interchange.

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