SYDNEY: The Reserve Bank of Australia (RBA) says it is a "reluctant regulator" of credit cards, while leaving the door open to force providers to reduce interchange fees.
In a speech yesterday, RBA assistant governor Malcolm Edey said he was not in a position to predict what its board's next decision on credit card fee regulation would be, but that good progress was being made in promoting competition.
"The Reserve Bank is a reluctant regulator," Dr Edey told the Cards and Payments Australasia 2010 Conference in Sydney.
"We'd prefer to see fees being held down by competition than by direct regulation.
"We believe there's been good progress in promoting competition over recent years.
"But it's not yet clear whether that will be sufficient."
A review of card payment reforms the RBA undertook in 2007-08 found reforms to date had delivered lower costs to merchants and increased competition and that price signals had been strengthened, transparency enhanced and access improved, Dr Edey said.
Credit card interchange fees had declined to an average 50 basis points from 95 basis points before the reforms, he said.
In 2009, the board deferred a decision to make a further reduction to 30 basis points on interchange fees.