Reform of Credit Card Schemes in Australia
19 March 2002
The Commonwealth Bank today released its Submission to the Reserve Bank of Australia dated 15 March 2002 on the Reserve Bank's proposed reform of credit card schemes in Australia.
The Bank's Head of Retail Customer Services, Mr Nick Kennett said: "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".
Major points from the Commonwealth Bank's submission include:
- The critical importance of maintaining confidence in the credit card systems;
- The Reserve Bank's proposed reforms do not provide the incentive for participants to invest in payments infrastructure in Australia which is essential if merchant and customer needs are to be met in the future;
- The proposed standard for interchange fees is flawed, including unjustifiably excluding particular cost categories from the Reserve Bank's proposals;
- The Reserve Bank's proposal to allow merchants to surcharge will lead to a regulated competitive disadvantage for credit cards versus American Express and Diners' Club; and
The Reserve Bank's access proposals are incomplete as the detail of the proposed prudential standards to apply to the new category of participants are yet to be developed.
"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", Mr Kennett added.
The Bank has also requested that its Submission be made available on the Reserve Bank's Strategy website.