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ICCC Response to Media Inquiries About EFTPOS Machine Charges

The Independent Consumer and Competition Commission (ICCC) has responded to recent media reports of 3rd November 2017 about merchants overcharging customers for the use of EFPOS machines.

ICCC Commissioner and CEO Paulus Ain said that Complaints against Electronic Funds Transfer at Point of Sale (EFTPOS) charges by merchants/traders are an on-going issue around the country.

“Generally speaking, customers should not be made to pay a fee for using an EFTPOS if the fees charged by the merchant/trader has not been authorised in the first instance by the commercial bank with whom the merchant/trader concern has some form of valid agreement that clearly says that such fees must not be charged.”

Mr. Ain added that the ICCC has dealt with a number of EFTPOS related complaints in 2015.

“As part of its formal inquiry, ICCC was privy to information provided by commercial banks and has received a copy of a Merchant Agreement. Information received by the ICCC in the past showed that the various EFTPOS machines in shops are owned by commercial banks,” said Mr. Ain.

“Respective commercial banks supply EFTPOS machines to merchants/traders under some form of formal arrangement, usually in the form of a Merchant Agreement. In short, the ICCC established that the Merchant Agreement spells out the obligation of both parties and provides for avenues for the commercial banks as owners of the EFTPOS machines to penalise a merchant/trader that breaches the terms of the Merchant Agreement. For example, it allowed the commercial banks to repossess the machines should a merchant/trader breach the terms of the Merchant Agreement. In normal circumstance, the ICCC noted that a warning letter is issued by the commercial bank before an EFTPOS machine is withdrawn from the premises of the merchant/trader concerned.”

In ICCC’s investigation of similar cases in 2015, the ICCC was advised that the commercial banks charged merchants/traders a minimal monthly maintenance fee for the use of the machines and as part of the Merchant Agreement, merchants/traders were discouraged by commercial banks to charge customers additional transaction fees; but were encouraged to recoup this cost by passing this to customers through their normal mark-up of goods and or services.

At present the ICCC is not privy to the current terms of the Merchant Agreements between commercial banks and the various merchants/traders in the country and therefore is uncertain if similar terms are still adopted and enforced.

In the 2015 cases that concerned the EFTPOS machine of a particular commercial bank, the ICCC strongly advised the commercial bank to approach the merchant/trader concerned and address the matter under the terms of the Merchant Agreement. They assured the ICCC that they would and consequently, the complaints were resolved between the commercial bank, the merchant/trader and the customers concerned.

Based on these experiences, the ICCC’s position is that, where Merchant Agreements between respective commercial banks and merchants/traders is in force, and where there are clauses that allow for the commercial banks to take corrective action similar to those described above, the commercial banks have a moral obligation to act and protect innocent customers who are aggrieved by unscrupulous traders.

Mr Ain said that commercial banks must enforce the relevant terms of their respective Merchant Agreements in the first instance.

“This is an alternate to them closing the merchants/traders’ bank accounts which obviously, is not in the commercial interest of the commercial banks. Nonetheless, the commercial banks must take the lead to address customers’ concerns concerning the use of their EFTPOS machines issued to merchants/traders.”

Respective Merchant Agreements are private commercial contractual arrangements between the respective commercial banks and the merchants/traders. Under normal circumstances, each party should have a right to be heard and where one part acts contrary to the terms of the agreement; there are penalty provisions. It should also provide an avenue for dispute resolution, and where disputes cannot be amicably resolved; the court is the appropriate forum for addressing disputes. The consumer protection provisions of the ICCC Act restricts the ICCC from getting involve, to enforce or resolve matters that are contractual between parties; thus the ICCC cannot enforce the terms of the Merchant Agreement on behalf of the commercial banks for the benefit of consumer. This is the responsibility of the commercial banks.

Mr. Ain emphasised that the ICCC does not set the monthly maintenance fees applicable to EFTPOS machines under the Merchant Agreement, nor does it set the fees that unscrupulous merchants/traders charge consumers for use of EFTPOS machines and therefore follows that the ICCC cannot enforce the proper EFTPOS fee(s), if there is indeed one.

The ICCC is of the view that the terms of the Merchant Agreement between commercial banks and merchants/traders covers this matter, thus commercial banks must act in the interest of aggrieved customers who are subject to the use of EFTPOS machines issued to merchants/traders by the commercial banks. Also if the terms of the Merchant Agreements are not effective nor workable, commercial banks need to look into alternate means to address the concerns of customers in so far as this relates to them paying extra fees for using commercial bank issued EFTPOS machines.

The ICCC welcomes an opportunity to discuss this matter with the commercial banks to assist them find a way to effectively addressing consumer concerns.

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