‘s biggest bank has been secretly leading a campaign against plans to ban credit card fees.
The Commonwealth Bank is concerned about a Reserve Bank plan to remove interchange fees on EFTPOS, Mastercard and Visa cards that it has secretly been co-ordinating a campaign with the banking industry’s peak body.
CBA is concerned about removing interchange fees, or the wholesale cost of doing a transaction for a small business despite making a record, full-year cash profit of $10.3billion, arguing this could see hidden costs passed on to customers.
A confidential draft letter, obtained by Capital Brief, had CBA – with a $289billion market capitalisation – arguing the Reserve Bank proposal would ‘jeopardise’ ‘s payments system and hamper innovation.
‘The speed at which proposals have been tabled means the proposals themselves are sitting on unsteady data and analysis,’ the bank argued in one version of the letter.
‘The short time frame of the consultation process has not allowed sufficient alignment between policy objections and likely outcomes.’
The letter was addressed to Reserve Bank of Governor Michele Bullock after the RBA last month released a consultation paper arguing debit and credit card surcharges and interchange fees were costing ordinary ns $1.2billion a year.
‘Removing surcharging, combined with reductions in interchange fees and greater transparency of payment costs, would make card payments simpler, more transparent and more efficient for consumers and merchants,’ the RBA consultation paper said.
The Commonwealth Bank accepts the need to scrap surcharge fees, or extra costs unrelated to the wholesale cost of a transaction being passed on to customers. But it is fighting to keep interchange fees as the RBA proposes to scrap surcharge fees and reduce interchange fees.
‘Surcharging is no longer achieving its intended purpose of steering consumers to make more efficient payment choices: avoiding surcharges has become harder as cash usage has declined, businesses are increasingly charging the same surcharge rate across debit and credit and there are significant challenges with enforcing the current surcharging rules,’ the RBA said.
‘Removing surcharging would make card payments simpler, more transparent and help to increase competition in the card payments system.’
The letter was apparently shared with the n Banking Association, with submissions to the RBA consultation due by August 26.
A Commonwealth Bank spokesman told Daily Mail that CBA accepted the need to scrap surcharging fees but argued interchange fees were still necessary to reflect the wholesale costs of doing transactions.
‘We are reviewing the recommendations released by the RBA in its Merchant Cost and Surcharging Consultation Paper,’ he said.
‘We believe removing surcharging across debit and credit cards will make card payments simpler, increase transparency and consistency, and eliminate the difficulty of enforcement. See our public submission for more detail.
‘The changes proposed to interchange are significant and we are assessing the implications and will share our views in the consultation process.’
Daily Mail understands the Commonwealth Bank had drafted a letter encompassing the views of banks and payment providers that could convey a position to the Reserve Bank review.