Stephen Bartholomeusz writes in Melbourne's The Age about the Reserve Bank of Australia's actions regarding interchange fees.
The Reserve Bank's painful and painstaking attempts to reform interchange fees for electronic payments is inching towards its logical conclusion. Within two years it is probable that the fees banks and retailers pay themselves for credit card, Eftpos and other electronic transactions will be abolished.
That isn't quite what the RBA said yesterday when it issued draft standards for Eftpos and Visa debit card transactions under which fees would be slashed. It is, however, clearly the direction in which the RBA is heading, and it will inform its planned review of all card systems in 2007.
The Reserve Bank issued a press release yesterday on the subject including draft standards for the EFTPOS and Visa Debit systems.
In the Bank's opinion, the current levels of these fees are not conducive to the efficiency of the Australian payments system. In reaching this opinion, the Bank has considered not just the EFTPOS and Visa Debit systems, but also their interaction with other payment systems, including credit cards. It has also considered how the overall payments system is likely to evolve over time if the current incentives facing merchants, financial institutions and cardholders are left unchanged.
The RBA also announced it is seeking input on how to address the problem of credit card schemes with higher interchange fees being more attractive to issuers and asks whether essentially the same interchange fee should therefore be applied to all schemes.