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Date Published : Tuesday, March 25, 2008
Old payment systems currently being used by some of the largest banks in Australia are costing consumers billions of dollars each year, according to a new report.
Antiquated technologies - some up to 30 years old - are being used by large banks to process credit card and direct debit payments.
However, such technologies are so slow that consumers often end up having to pay late payment penalties as a result of the technologies in place at major financial institutions across the country.
As a result, consumer magazine Choice states that consumers were charged at least $1.6 billion in late payment fees on credit cards and overdrafts last year due to the problems.
Family First senator Steve Fielding told the Australian: "Outrageous bank fees need to be reined in.
"Banks have been encouraging people to use electronic transactions, but instead of fees coming down they've gone up."
The newspaper reports that local technology firm Distra has started to introduce a new payments system which speeds up the current procedure. National Australia Bank and four UK-based institutions have started implementing the technologies over the last few months.
Mike Aston, chief executive of Distra, said: "The issue is doing away with fees that are totally unfair and getting the rest back to reasonable cost recovery.
"These clunky old systems can't get any closer than 24-hour settlement.
"During the day they're simply exchanging messages about transactions, while settlement and reconciliation takes place overnight as a batch process."
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