Won’t capping interchange fees make my credit card fees cheaper?


No. In fact, quite the opposite. Merchants are saving approximately $676 million annually as a result of the Reserve Bank’s regulations, meaning that over the 12 years of fee regulation they have saved over $8 billion in costs. However, there is no evidence that these cost savings have been passed on to consumers as either price cuts or better products.

You can’t regulate away cost. The evidence shows that if the government allows the RBA to impose further price caps, then these funds will be recouped elsewhere - through a combination of higher interest rates, higher annual fees, a slashing of rewards programs, and much shorter interest free periods. Competition will also be hurt, as smaller community-owned banks, building societies and credit unions may no longer offer low-interest credit cards.

In short, this will be a bad move for credit card users.