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Date Published : Wednesday, June 04, 2008
Tales of Australians slugged with high credit card fees could come to an end soon after the Reserve Bank warned financial firms not to gouge customers with high charges.
Last month, figures from the Reserve Bank's annual review of bank fees showed that the total fee income from credit cards and debit cards used by householders rose by 12 per cent in the last financial year - and 170 per cent over the past five years.
However, as a result of the report, the Reserve's assistant governor Philip Lowe warned banks that they would face severe penalties if they did not reign in erroneous charges.
Mr Lowe pointed at interchange fees - the fee banks charge each other when someone uses a credit card - as a key cause for concern.
He told the Visa Forum at Hamilton Island in Queensland that the Reserve Bank board was prepared to reduce interchange fee payments regulation if the financial industry lowered fees, which should flow to customers.
"The board would, however, consider re-regulation if, after having stepped back, interchange fees were to subsequently rise materially."
Mr Lowe stated that the large-scale reforms of the payments system - which had been overseen by the federal government and the Reserve Bank - had "largely" met the objectives and had opened up the credit card market to create more choice for consumers.
He added that EPTPOS still had a large role to play in the nation's payment system.
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