(16 March 2010 – Australia) The Reserve Bank of Australia’s assistant governor, Malcolm Edey, has said that the RBA is a ‘reluctant regulator’ of credit cards; and despite a reduction in interchange fees, they still remain too high.In a speech at the Cards and Payments Conference in Sydney yesterday, Dr Edey said the Reserve Bank of Australia remains a reluctant regulator of credit card interchange fees, adding that the regulatory body would prefer if the fees were kept down due to competition opposed to direct regulation.
Dr Edey added that interchange fees charged by banks have reduced since the RBA implemented changes three years ago; dropping from almost one percent to an average of 0.5 percent.
Even with that reduction, interchange fees are still too high, the assistant governor highlighted.
Mr Edey said that the RBA believes there has been good progress in promoting competition over recent years, but it’s not yet clear whether that will be sufficient; adding that the regulators general mandate with respect to the payments system is to promote efficiency and stability.
That includes taking measures to stop fees from rising too far above efficient levels. However, the preference is to do that when the RBA can by promoting competition rather than by direct regulation of fees, Mr Edey concluded.