Some banks 'punishing customers for online payment glitches'

Australians are increasingly being left with little alternative but to pay their household bills electronically using a credit card or automatic transfer, but some banks have "shifted the risk" to users meaning they are penalised for errors in the system, a consumers' group has said.

According to Australian IT, the Combined Pensioners and Superannuants Association of NSW (CPSA) believe the options to pay bills by cash have been "eroded" - while at the same time, customers are being "saddled" with some of the risks of electronic payments.

The group's policy co-ordinator Paul Versteege said consumers are punished for "hiccups in the payments system" by penalties set at "seemingly arbitrary levels" that bear no relation to whether the problem could have been avoided.

"With the automation of utility payments, the scope for errors outside the customer's control has widened," he added.

Tony Nicholson, the executive director of poverty action group the Brotherhood of St Laurence, said with some penalty fees standing at $50 for a single missed direct debit, the bank accounts of people on low-incomes are being hit the hardest.

"There may be some cost involved for a bank, but the size of these fees seems to be a disproportionate penalty," he said.

Research conducted by the Consumers Association's Choice magazine and the Consumer Action Law Centre found that direct debits cost 27 cents to process, so the cost of a failed transfer "may be 54 cents". Yet, its figures show penalty fees range from $35 to $50.

Some banks have already taken steps to help their customers avoid penalty charges. St George, for example, has an SMS text service that notifies account holders via their mobile phone if they do not have the funds to cover a scheduled payment.

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