Reserve Bank to continue regulating Credit Card & EFTPOS fees

Because the industry has not made sufficient progress to improve competition in the payments market the Reserve Bank will continue to regulate bank fees levied on credit card and EFTPOS.

Last year in September the RBA called on the banks to develop a more suitable online process to improve the EFTPOS network.

The banks were also asked to provide voluntary undertakings to guarantee that "interchange fees" on card transactions would not rise.

Although the Payments System Board accepted the fact that the banks were moving towards better pricing and operating efficiency they found that reform was not yet good enough for the removal of fee regulation.

Due to the bank's efforts the Payments System Board decided not to force the banks to lower their interchange fee from 0.5 per cent for each card transaction.

The board has admitted that progress has been made in both these areas, but unfortunately insufficient to warrant a decision to step back from interchange regulation.

Industry groups had mixed feelings regarding the PB's wait and see approach to reform and its decision not to stand back from interchange regulation.

David Bell chief executive of the Australian Payments Clearing Association stated that the RBA's decision to delay a final decision on credit card interchange fees seemed reasonable.

Published on September 9-st, 2009 in Credit Cards
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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