Woolworths The Fresh Food, Debit Card People

Australias attraction with the credit cards is in decline. Infact more and more of us are switching from credit cards to debit cards. Debit cards give you a double advantage. They let you use your own money so there is no interest attached to it. Plus they have all the convenice of a credit card (eg ordering online or over the phone).

However Woolworths are now penilising debit card users. Myself and Renee use our debit card for most transactions. When we swipe our card through the eftpos machine we get a choice of hitting the savings button, cheque button or credit button.

9 times out of ten we hit the credit button. This is due to the fact that our bank does not charge us anything to do this. However if we hit the savings button we get charged $1.00 each time. If we hit the cheque button we get charged $1.00 each time.

Woolworths have some clever sneaky people working for them and they have decided to take the credit option off their machines for debit cards. Not if you use a credit card but only a debit card.

Now you might think why would they do this. Every time you press credit on eftpos with your credit or debit card woolworths get slugged 1.5% of the transaction.

They cant take the option away on credit cards as thats what credit cards are designed to do. However they can take the option away on debit cards. This forces you to select the savings or cheque button on the eftpos machine. Bingo they no longer get charged the 1.5% merchant fee.

So who now pays for the transaction. You do by a fee set up by your bank. Woolworths have passed the cost on to their consumers.

But it does not stop at just Woolworths. Remember they own Big W, BWS, Tandy, Thomas Dux, ALH, Dan Murphys liquor, Safeway and Dick Smiths Electronics and from all reports these stores will be going this way as well. Are we opening the door to something we wont be able to stop. Where will it end. Will Coles now follow suit. Then service stations. Or smaller retail stores.

You have to remember that the average cost of using the savings button rather than credit is around 80 cents per consumer. Just think if you purchased a $40 carton of beer from Dan Murphys. You only have a debit card so you have to press savings. Your bank then charges you the 80 cents Australian average for hitting savings.

Lets break down the cost of the beer.  

The new total cost is now $40.80. So the 80 cents means your shopping purchase has increased by 2%.

This means that if you were only going to spend exactly $40 in any Woolworths or Dan Murphys at 2% to everything you are looking at. Or a different way to look at it is:

$20.00 exactly equals a 4% increase in cost at 0.80 cents saving transaction charge

$30.00 exactly equals a 2.6% increase in cost at 0.80 cents saving transaction charge

$50.00 exactly equals a 1.6% increase in cost at 0.80 cents saving transaction charge

$100.00 exactly equals a 0.8% increase in cost at 0.80 cents saving transaction charge

So as you can see by paying at woolworths, dan murphys, woolworths petrol or dick smiths, if you want to pay with your debit card dont expect the price on the ticket to be the final price.

How can you control this? The first thing you could do is check with you bank how much it costs you to hit savings or cheque button when paying with your debit card. You might find that you have a certain ammount of free uses of this farcility befour it cost you anything. Or some accounts it might be a free or unlimited time you can hit savings or cheque.

The second thing you could do is stop shoping at woolworth and its assocated companys. Start going else where. Supermarkets that understand, hitting the credit button (with a debit card) is a cost of doing business.

All businesses have costs: electricity, staff, gas, telephone, cleaning etc etc. And yes credit card fees from there banks. However Woolworths want to transfer thouse costs on to you and me. If people change there buying habbits and stop going to woolworths in protest, I have a feeling woolworths will soon revert this idea.