Commonwealth challenges Australian credit card reform
19 March 2002 | 1945 views | 0
The Commonwealth Bank says that proposed reform of credit card schemes by the Federal Reserve Bank of Australia will reduce incentives for the banking industry to invest in the national payments infrastructure.
The RBA proposals, unveiled on 14 December, 2001, challenge the basic tenets of the international payment card networks in the setting of interchange fees, surcharging, and who can join the system.
Nick Kennett, the Commonwealth's head of retail customer services says: "The bank believes that the proposed reforms will make the credit card business less efficient for all parties and will result in reduced competition, reduced benefits and higher fees for credit card customers, as well as reduced incentives for the bank to invest in payments infrastructure".
In its formal submission to the RBA, the Commonwealth argues that the proposed standard for interchange fees is flawed, and that the introduction of merchant surcharging will put credit cards at a competitive disadvantage to American Express and Diners' Club, which were excluded from the RBA review.
"The Commonwealth Bank wants to ensure that Australians continue to enjoy a competitive and robust credit card payments market, providing appropriate benefits to all participants. The bank looks forward to further consultation with the Reserve Bank to ensure that this is achieved", adds Kennett.