Yesterday, 26 May 2016, the Reserve Bank of Australia announced that it will move to increase regulation of interchange fees from 1 July 2017. The move follows the RBA’s publication of Draft Standards in December 2015, and a Senate inquiry which considered interchange fees as part of a broader inquiry into credit card interest rates – which recommended a Productivity Commission review. The RBA’s new regulations will particularly impact on premium credit cards.
“This is an awful decision that will cost consumers billions of dollars through increased fees and slashed reward points” said Aaron Lane, National Campaign Director at the Australian Taxpayers’ Alliance.
“The RBA has cynically dumped this decision during the middle of an election campaign to avoid scrutiny from a Productivity Commission inquiry, which was recommended by the Senate last year.
“The RBA has completely ignored more than 1,000 Australians consumers that made submissions expressing their concerns about the proposed credit card regulations. This decision is a win for the big retailers at the expense of everyday consumers. Australian credit card consumers can now expect higher fees, and slashed reward programs,” explained Mr Lane.
“The RBA's own data shows that interchange fee regulation cost Australian credit card consumers more than $8 billion over the past 12 years. Today’s announcement will make it even worse,” said Mr Lane.
“The RBA is trying to ban premium cards. It seems like the RBA wants everyone to have a no-frills credit card. Australians value their reward and loyalty programs, but for some strange ideological reason the RBA is depriving consumers of choice and competition,” said Mr Lane.
The Turnbull government rejected calls for further interchange fee regulation as part of its Financial Systems Inquiry response. It was also rejected by a Senate Inquiry, who recommended the issue be examined by the Productivity Commission.
“Has the RBA dumped this decision in the middle of an election campaign to avoid proper scrutiny by a Productivity Commission review?” asked Mr Lane.