Cry us a river! How the Commonwealth Bank - worth $300BILLION - is secretly trying to fight a push to axe annoying credit card surcharges
The Commonwealth Bank is so worried about the Reserve Bank's proposals to remove surcharging fees on EFTPOS, Mastercard and Visa cards that it has secretly been co-ordinating a campaign with the banking industry's peak body.
A confidential draft letter, obtained by Capital Brief, had CBA - with a $289billion market capitalisation - arguing the Reserve Bank proposal would 'jeopardise' Australia'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 Australia Governor Michele Bullock after the RBA last month released a consultation paper arguing debit and credit card surcharges were costing ordinary Australians $1.2billion a year.
'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 Commonwealth Bank which recently announced a record profit is worried about the Reserve Bank proposals to remove surcharging on EFTPOS, Mastercard and Visa cards
The letter was apparently shared with the Australian Banking Association, with submissions to the RBA consultation due by August 26.
A Commonwealth Bank spokesman told Capital Brief cutting card fees would deprive Australian banks of a revenue stream that could be invested back into the payments system.
'The net result would be domestic institutions have less to invest as the infrastructure providers in Australia and overseas institutions will have more to harvest,' he said.
'If we have too little funding on one side of the payment system, we're going to find it a lot more difficult to keep up and stay ahead of the rest of the world.'
Daily Mail Australia 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.
The letter is at odds with the Reserve Bank's consultation paper.
That concluded that efficiency and competition in Australia's payments system would be encouraged by removing surcharging on all designated debit, prepaid and credit card systems.
'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,' it said.
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Cry us a river! How the Commonwealth Bank - worth $300BILLION - is secretly trying to fight a push to axe annoying credit card surcharges
Australia's biggest bank has been secretly leading a campaign against plans to ban credit card surcharges. The Commonwealth Bank is so worried about the Reserve Bank's proposals to remove surcharging fees on EFTPOS, Mastercard and Visa cards that it has secretly been co-ordinating a campaign with the banking industry's peak body. A confidential draft letter, obtained by Capital Brief, had CBA - with a $289billion market capitalisation - arguing the Reserve Bank proposal would 'jeopardise' Australia'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 Australia Governor Michele Bullock after the RBA last month released a consultation paper arguing debit and credit card surcharges were costing ordinary Australians $1.2billion a year. '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 Commonwealth Bank which recently announced a record profit is worried about the Reserve Bank proposals to remove surcharging on EFTPOS, Mastercard and Visa cards The letter was apparently shared with the Australian Banking Association, with submissions to the RBA consultation due by August 26. A Commonwealth Bank spokesman told Capital Brief cutting card fees would deprive Australian banks of a revenue stream that could be invested back into the payments system. 'The net result would be domestic institutions have less to invest as the infrastructure providers in Australia and overseas institutions will have more to harvest,' he said. 'If we have too little funding on one side of the payment system, we're going to find it a lot more difficult to keep up and stay ahead of the rest of the world.' Daily Mail Australia 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. The letter is at odds with the Reserve Bank's consultation paper. That concluded that efficiency and competition in Australia's payments system would be encouraged by removing surcharging on all designated debit, prepaid and credit card systems. '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,' it said.
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