Woolworths Debit Cards Policy Causing Confusion

Using a debit Visa or MasterCard gives you the flexibility of using a credit card while spending your own money. Reports have suggested that Woolworths and its various subsidiaries have banned the cards, but the truth is a little more complex.

Lifehacker reader Brett wrote in to point out this development:

Just went to Woolies today. They said that I can't use my Visa Debit card anymore. When I swiped my card, I was only given the option of Cheque or Savings. Very odd as I have used Woolies a few times in the previous week and had no issues. No signs around Woolies, nothing.

However, as a statement on the Woolworths site explains, the company has not barred the use of debit cards -- it has switched to processing payments on those cards via the local EFTPOS network, rather than clearing them through the international credit card networks. As a result, the option to select 'credit' as an account doesn't show up on its payment terminals, but the accounts associated with the card will appear.

Since debit cards draw funds from those accounts anyway, it's the same money getting spent. The only real practical difference this makes is that you'll always need a pin number when paying, rather than using a signature.

Update: Check out our longer analysis of this issue.

Woolworths


Comments

    Don't EFTPOS transactions count towards your bank transaction limit where as Credit Card debit do not? Or am I missing something.

      It would depend on the individual bank and account -- some don't have limits on EFTPOS transactions.

        no 99.9 % of banks charge fees for the use of eftpos

        the website says it uses EFTPOS rather then international Visa/Mastercard, which is a decoy from the fact in my book!!!

        shame on you woolies...

        at least we have coles!

        Ben - 99.9%? I know for sure at least 1 of the big 4 (nab) don't charge eftpos fees on their visa debit cards.

        My Bankwest account doesn't charge me anything for EFTPOS or credit. I've actually never seen an account that charges for EFTPOS transactions, just ATM transactions or Internet Banking transfer fees. Selecting credit sometimes incures a small percentage fee, so what out for that when at restaurants or purchasing large items.

      I find it frustrating that this was not properly communicated to customers and sales staff only had halve the story. I am switching to Coles, I think that brand loyalty should be fostered by Woolworths and if enough sales drop off they will reconsiderthis position.
      Al

    the other difference is that CBA have no spend limit on Credit, but a max $2000 spend limit on Savings transactions. Also some banks charge fees for using Savings, and not for credit transactions..

      Maybe it's time you get your banking out of the 90s where there's no such thing as transaction limits.

        Looks like im not the only one James.. read the other comments..

      Is it really that high? I thought it was combined with the ATM limit, making it more like $800 for the CBA and $1000 for the other banks.

    Look like I'll be doing my shopping at coles this week.

    This means we don't get protection from Visa as well. What's the real reason for this? Are they trying to reduce fees from the CC companies?

      Thats exactly what they're trying to do

    Geoffrey Halliburton, my thoughts exactly.

    "Q. Why is Woolworths making this change?
    A. Costs associated with processing these cards through the Credit Network are high and unnecessary. By making this change Woolworths can reduce costs which are then passed on to all customers through lower shelf prices."

    In other news, astrogirl is no longer shopping at woolworths.

    Q. Why is Astrogirl making this change?
    A. Fees associated with processing these cards through the EFTPOS Network are high and unecessary. By making this change Astrogirl can reduce costs which are then passed on to other businesses that accept Visa Debit through her shopping there instead.

      I LOL'd

      Brilliant! You're awesome! I couldn't have phrased it better! Why if you weren't my sister... Oh wait. we're robots.

    Maybe its because Woolies have their own Visa cards now, so they force you to spend. Also EFTPOS is not free (some limited transactions) while paying by credit is usually free.. or in this case WAS!

    Dodgy, they justify it by saying cause you now need a pin you are safer... yeh right, in the end its all about $$$.

    Yep, this is bad news for consumers. EFTPOS fees are usually covered by the payer, credit transaction fees are more often than not covered by the payee.

    What I want to know is how Woolworths can tell whether a card is a credit or debit card? Surely the nature of the account is a matter of business between the bank and the cardholder and them alone.

      Woolies can determine based on the card number what sort of card it is and thus what fees they will be charged.

    I noticed the lack of "Credit" option on my last shopping trip - I assumed it was a glitch..
    I recall a recent campaign (can't remember which bank) trying to get people to use credit instead of savings if given the option..
    No EFTPOS limit on my account, but if there were I'd sure as hell be leaving Woolworths in my dust on my way to Coles..

    This is outrageuos. Firstly they limit their 'epump' to only woolworths cards, now this.
    I'll shop else where from now on.

    Everyone please sent a quick email to current affairs programs to get coverage on this.

    i noticed it at big w. so, im assuming its at woolworths, and all woolworths owned companies?

    Looks like we'll be moving to the competition. IGA and Aldi all the way.

    It's funny to read people vent their anger at Woolies.

    Nothing is 'free' - especially when it's provided by a bank. The reason you can use the 'credit' option as many times as you like is because your bank earns a fee from the merchant (i.e. Woolies) for each transaction. With EFTPOS, your bank has to pay a fee to Woolies' bank.

    Importantly, however, the fee that your bank gets from Woolies (when you choose 'credit') is much higher than the fee that Woolies' bank gets when you hit cheque or savings. In other words, the EFTPOS system is a cheaper system - for society as a whole - than the Visa/MasterCard systems.

    If Woolies allowed people to choose 'credit', then they would either have to absorb the cost or raise grocery prices for everyone. Which do you think they would do?

    Lots of banks now provide 'all you can eat' transacction accounts - either for $5 per month, or $0 per month if you deposit your salary. That's a much better way to go.

    Oh, don't forget, that with a Debit Visa or Debit MasterCard, you're exposed to the same risk of fraud as with a regular Visa or MasterCard credit card. Fraud levels are much lower on EFTPOS cards, because you can't use EFTPOS online and you always need a PIN.

    If you're a victim of fraud, you won't get your money back until the bank decides you weren't responsible for the loss (unlike with credit cards, where you don't have to pay until the bank investigates).

    The reason Visa and MasterCard provide "fraud protection" is because fraud is a problem.

    Not only have Woolworths taken away the option to use the debit card as it was meant to be used but the staff are also telling customers that there is no charge for using EFTPOS!

      There isn't a charge by Woolworths to the customer, so I don't see how that's inaccurate information.

        Because there may be a charge by the bank and some customers will blame the person who actually gave them information rather than the source, leading them to come and complain to Woolies when they should be going to their bank.

    Coles it is then

    Thanks for bringing this up Angus.. It is something that is really annoying and very poorly detailed. I think that it is very dodgy, and very poor taste on the part of the big W.. Alas I only seem to remember my distaste when I front up at the counter..

    Yeah I've seen (some) of the EFTPOS machines have signs on them but a lot don't. My credit union only gives me 4 or 5 free EFTPOS transactions a month.

    SO I WON'T BE SHOPPING AT WOOLWORTHS OR BIG W ANYMORE.

    I heard about this a little while back, and listened to a Woolworths spokesperson make some very conflicting statements.

    1) They claimed that use of Debit cards was becoming an unmanageable cost due to their rising prevalence in transactions and the fact that they get charged a percentage fee by the bank for credit card transactions.

    2) They said it would only impact a VERY SMALL number of consumers as less than 1% of their customer base actually use this method.

    So which is it? If it's only 1% then how do the other 99% pay?

    I am sure actual credit card usage (as opposed to debit cards using the credit option) is much higher than 1%, but they aren't stopping you using them. Imagine the furore if they stopped accepting credit cards! or if they did (as they have a right to) charge a small fee for credit transactions.

    They'd be publicly shamed on every current affairs show in the country, and every reputable media outlet too!

    My bank makes a POINT of promoting these debit cards as a way to avoid fees. The fees to use them as EFTPOS are quite high, whereas credit transactions are fee free. Using the credit option allows them to recoup a small amount in fees from the retailer, in the same way every other credit transaction does. Those costs are BUILT IN to the costs at the supermarket. We're not inventing a new expense for Woolworths.

    Now... I've had my rant, but I'll mention one last thing. I'm not sure if or how this applies, but doesn't Australian law say that you cant artificially limit payment options in this way? Didn't Ebay have to do an about face when they tried to limit the options for making payment?

    I'm looking forward to leaving a few hundred dollars of groceries on the checkout when they refuse to allow a credit transaction.

    Don't boycott them. Make a public statement, in teh store, so the managers have to explain to their bosses what's happening at the checkout.

    Fill your trolley, and then refuse to pay by any means other than credit! If they wont accept your payment, walk out and go to Coles, or IGA.

    It's shopping night tomorrow. I'll be putting them through the wringer.

      Yes, eBay did -- but that was when they were trying to make PayPal the sole option for accepting payments. The Woolworths situation is rather different. Retailers generally aren't obliged to offer multiple payment methods -- think how many places don't accept Amex or Diner's Club or cheques, for instance. Whether reducing the options is a wise business decision is another matter, but it isn't a regulatory issue.

      Travis, I have just finished reading about what your intent was for 12 May 2010.
      I can understand your displeasure with the changes that Woolworths have implemented regarding your debit/credit card/s. I hope you didn't leave your hundreds of dollars worth of shopping as it isn't the Woolworth board members or store managers that has to return the stock...it is the customer service and grocery people that your "game" impacts on and just leaves us with a feeling of a lack of respect from the customer. Do you really think that doing things like that has any effect on board members or store managers?

    Hi Angus,

    I beleive the main reason is as simple as this:

    Woolworths are PAID by the banks about 30cents per transaction over EFTPOS because they banks are connecting into the Woolworths infrastucter and not the other way around like most businesses.

    For Visa/Mastercard this is not the case and its a cost to the company.

    Not only is Credit free it does provide extra protection, it does not restrict to your daily limit/Transaction Limit and as for ease of use most cards allow a pin to be used for credit

    This is a sad day

    Every Woolworths should have been displaying an informational about this issue for the past month, the store I work at has done this for nearly two months. The reason behind the change is simple: Woolworths was charged every time credit was chosen using a debit card, so by removing the option Woolies saves themselves money and passes that into lowering store prices (It says this in the document all staff are supposed to read).

    I'd say that about 1 in 6 customers I've served since the change (5th May) have tried to use credit with a debit card, and getting rather frustrated when I explain why it is no longer an option.

    Outside the costs the retailer is hit with there is another consumer loss with this; albeit likely not very much of an issue at a grocery store, but if Dick Smiths start or overseas retailers....it might be a different story!

    If you select the "credit" option on one of these cards your purchases and transaction are covered by similar insurance parameters as a Credit Card purchase.

    From the ANZ bank website:

    "By pressing credit when you use your Visa Debit card, you gain access to all Visa's security benefits such as Visa's Zero Liability policy, which protects you against unauthorised transactions. Some banks offer 24/7 monitoring of transactions to detect unusual and suspicious activity."

      It started at Dick Smith on the 5th of May. All Woolworths-owned retailers are doing this, so Woolworths/Safeway, Big W, Dick Smith and BWS. One or two others are owned by Woolworths, too, I think.

      “By pressing credit when you use your Visa Debit card, you gain access to all Visa’s security benefits such as Visa’s Zero Liability policy, which protects you against unauthorised transactions.”

      Hahah - that is so poorly worded! So I'm protected against unauthorised transactions, but only if Credit is selected? I better leave a Post-It note on my card reminding any thieves to do just that!

        Yes but you need a pin to not do credit, I'd say about 90% of people who select credit sign for it - that's what they're protecting against.

    It would surprise me if Visa and Mastercard had a policy that allowed this discrimination based on card type. I would have thought that once a merchant signed up to accept, say, Visa cards they'd be bound to honour transactions when presented with any Visa card, debit or otherwise.

    To all the idiots that won't be shopping at Woolworths - thank you.

    The checkout queues will be shorter and because Woolworths will save money by not paying banks fees on credit/debit cards, they may pass the savings onto me.

    As some smart people on this thread have already stated, complain to your bank, not Woolworths. Your bank is the problem, not Woolworths.

    Anyhow, bugger off to Coles so that I can get through the checkout line, and while your complaining at Coles, think about your Bank ripping you off.

      The day that Woolworths pass the "savings" onto consumers will be the day your namesake appears alive and well. The only people to benefit will be the shareholders.

        Hear hear!

      Haaaahahahahahaha. That is hilarious. Yeah, Woolworths are really going to pass on the savings!!! of course my bank must be ripping me off- being that I pay no fees, and manage to get paid interest.

    i think this is a clear case of banks vs. retailer. for those who are willing to leave woolies over this, think about your choice in bank account first. you have probably been suckered into the visa/mastercard network by low fees, better interest or some other muck.

    a clever consumer might have 2 cards and attempt to take benefits from each

    1a. some visa/debit actually pay you $5 a month to put your salary in there, $60 a year for nothing? thank you
    1b. now i can use debit on the internet or where credit card is the only accepted method (probably the whole point of the card!?!)

    2a. eftpos with less than $60 year in fees(most accounts), yeah fine, equal or better to what i was getting before anyway... so if $0 access for the biggest ATM netwoks is what I have to pay, fair enuf.
    2b. woolies problem? what problem

    don't let a piece of plastic ruin your day :)

Join the discussion!

Trending Stories Right Now