Productivity Commission to settle interchange fee debate

Media Release: Australian Taxpayers’ Alliance response to Senate Economics Committee Report

“The Senate Committee did not recommend any further regulation on interchange fees. This is massive win for credit and debit card consumers,” said Aaron Lane, National Campaign Director of Don’t Let Them Pass the Buck.

Today, the Senate Economics Committee released its report ‘Interest rates and informed choice in the Australian credit card market’ following its inquiry into credit cards and interest rates. The Senate Committee examined interchange fees amongst a range of issues. The Australian Taxpayers’ Alliance and the International Alliance of Electronic Payments made a joint submission to the inquiry, and the ATA appeared before the inquiry on the 16 October 2015 at a public hearing held in Sydney.

“Credit card consumers have had their interests represented in this inquiry through the strong advocacy of the Australian Taxpayers’ Alliance in conjunction with our Don’t Let Them Pass the Buck campaign. The ATA’s submissions received good coverage in the Senate Committee report, with the committee referring to both the ATA’s written submission and our evidence before the inquiry,” said Mr Lane.

In commenting on the specifics of the report, Mr Lane observed that:

“There is no recommendation to increase regulation on interchange fees. This is an excellent outcome for consumers, and lies in contrast to the current RBA proposals announced earlier this month.

“The only recommendation on interchange fees is that the government consider a Productivity Commission inquiry into payments regulations, focussed on interchange fees. This is a sensible recommendation. We urge the government to act on this as soon as possible to settle this debate.

“The prospect of a Productivity Commission inquiry on interchange fees is a challenge for those seeking increased interchange regulation to present evidence in support of their claims. The proponents of higher consumer costs can no longer hide behind their rhetoric. The Senate committee acknowledged arguments on both sides of the interchange debate, but noted that this did not mean all arguments were of equal merit.

The ATA provided the inquiry with substantive academic research from RMIT University Professors Jason Potts and Sinclair Davidson. The weight of evidence proves that interchange regulation has costs Australian consumers billions of dollars over the last decade alone.

“The prospect of a Productivity Commission inquiry on interchange fees means that the RBA should scrap its plans to impose further interchange fee regulation. The RBA should not act until the Productivity Commission have completed this inquiry.

“The current RBA proposals are an attack on premium credit cards, such as those cards linked to frequent flyer programs. When Woolworths announced plans to scrap its Qantas frequent flyer points system in favour of an internal 'discount dollars' loyalty the company suffered a large consumer backlash. Consumers value frequent flyer rewards programs. The RBA should not have the power to micro-manage which cards consumers have access to.

“Interchange fees pay for things like credit card fraud protection, interest-free periods, and credit card rewards programs which all provide significant benefits to consumers. They promote competition and innovation in the financial sector. These are all under threat by the RBA’s increased regulation on interchange,” concluded Mr Lane.


The Australian Taxpayers’ Alliance is a grassroots advocacy and activist organisation comprising of over 25,000 members dedicated to representing taxpayers and opposing over-regulation. Earlier this year the ATA launched a new online campaign ‘Don’t let them pass the buck’ – fighting proposals to increase regulation on interchange fees.