RBA To Continue Regulating Bank Fees On Credit CardsPosted August 29th, 2009
The RBA is going to continue to regulate our banking fees. These will be levied on EFTPOS and credit card transactions due to the fact that the industry hasn’t made enough progress to improve the payment market’s competition.
Last year in September the Reserve Bank put out a call to the banks to make the EFTPOS and online payment transactions more sufficient through its Payments System Board. Furthermore the banks were called upon to provide voluntary undertakings to guarantee the so-called “interchange fees” on card transactions.
The PSB ended up acknowledging that the banks were intent on moving towards better pricing and operating efficiency. But despite this, the board found the reform not good enough for the removal of fee regulation. To recognise bank efforts, the board has now decided not to force banks to lower their interchange fees from 0.5 per cent for each card transaction.
The RBA said: “The board has now concluded that, although progress has been made in both of these areas, it is not yet sufficient to warrant a decision to step back from interchange regulation.”
The point by which significant competitive pressure on interchange fees will be met has not been reached yet, but it is believed that this is a high possibility over time.
Industry groups reacted with mixed feelings to the wait-and-see approach by the board.
Chris Hamilton of the Australian Payments Clearing Association chief said: “Uncertainty about how and when the regulators will respond makes such collaborative effort that much harder. We will seek greater clarity from the RBA.”
Chief executive of Australian Bankers’ Association, David Bell said the RBA’s decision to delay a final decision on credit card interchange fees seemed reasonable.
Credit Card Offer Comparison
|Interest Rate (p.a.)||Balance Transfer Rate (p.a.)||Annual Fee||Cash Advance Rate (p.a.)|
Bankwest Breeze MasterCard
|A low interest rate on everyday purchases with a low balance transfer offer||0% for 4 months (reverts to 11.99% )||0% for 6 months||$59||21.99%|
Citibank Clear Platinum Card
|A low interest rate offer on balance transfers and purchases||0% for 6 months (reverts to 11.99% )||0% for 6 months||$49 annual fee for the first year ($99 thereafter)||21.74%|
|An introductory offer on balance transfer and a low annual fee||13.24%||2.99% for 6 months||$0 annual fee for the first year ($55 thereafter)||21.49%|
Virgin Australia Velocity Flyer Card
|Earn 1 velocity point per $1 spent, plus an introductory offer on balance transfers||20.99%||2.9% for 6 months||$129||20.99%|
Westpac 55 Day Credit Card
|No annul fee for the first year with a low rate on balance transfers and purchases||0% for 5 months (reverts to 19.59% )||0.99% for 9 months with 1% handling fee||$0 annual fee for the first year ($30 thereafter)||21.49%|