RBA reluctant to regulate credit card fees
Updated
Reserve Bank is undecided as to whether it should step in to force another reduction in transaction fees. (AAP: Alan Porritt)
The Reserve Bank says it is undecided on whether direct regulation or increased competition is needed to reduce the transaction fees that credit card companies charge.
During a speech to a cards and payments conference in Sydney this morning, the RBA's assistant governor Malcolm Edey said the central bank is a reluctant regulator when it comes to credit cards.
He says the central bank is undecided as to whether it should step in to force another reduction in the transaction fees.
He says credit card interchange fees - the fees banks charge one another when purchases are made by credit card - have fallen since the RBA's changes three years ago.
In that time they have gone from 95 basis points, which is almost 1 per cent, to an average of 50 basis points, which is half of 1 per cent.
But Dr Edey says even with that reduction, interchange fees are still too high.
"The Reserve Bank is a reluctant regulator. We'd prefer to see fees being held down by competition rather than direct regulation," he said.
"We believe there's been good progress in promoting competition over recent years, but it's not yet clear whether that will be sufficient."
In August last year, the RBA deferred a decision to make a further reduction on interchange fees to 30 basis points.
"Our general mandate with respect to the payments system is to promote efficiency and stability," Dr Edey said.
"That includes taking measures to stop fees from rising too far above efficient levels. But our preference is to do that when we can by promoting competition rather than by direct regulation of fees."
First posted
Search ABC News
Featured Video
-
Video
An explosion near San Francisco airport has set several homes ablaze in the suburb of San Bruno.
-
Video
Watch Florida pastor Terry Jones call off his threat to burn Korans.
-
Video
Hundreds of demonstrators in the Middle East burned US flags and chanted 'Death to America' in protest of an American Pastor's plans to burn the Quran
-
Video
A short-film portraying child abuse has been released to put the issue on the national agenda.
The ABC News Online Investigative Unit encourages whistleblowers, and others with access to information they believe should be revealed for the public good, to contact us.
