RBA governor confirms no decision has yet been made on surcharging
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More news: Reserve Bank governor Michele Bullock has confirmed that "no decision has been made" on the issue of ruling out surcharging and has hinted there could be some form of sweetener for small businesses.
When pushed further on the controversial proposal in a Q&A session after delivering the Bradfield Oration she said the RBA has received “quite a lot of feedback” with 170 submissions on “this and other issues”.
She said the views ventilated to the central bank included those from small merchants who would largely prefer to leave it alone, those who want to make debit cards free and allow credit card surcharges and a third camp to scrap all surcharges, in line with the RBA’s earlier proposal.
She acknowledged that small merchants faced high charges and said there had to be a way to ensure these business owners aren't “beaten on one hand" while also seeing "no gains for them on the other”.
But she said small businesses would either absorb the costs or pass it along to the customer as part of the cost base and total prices charged if the surcharges were banned.
Bullock was not asked about unemployment of inflation. But she was pressed about the property market.
“Housing and housing prices are not part of the Reserve Bank’s mandate,” she said, though acknowledged one way interest rates work their way through the economy is via the housing sector.
She said increasing supply is a “very knotty problem” and listed the need for skills and resources, on top of the issues of planning. She also refused to be drawn on the issue of migration and its role in housing affordability.
RBA governor Michele Bullock treads carefully on payment regulation
The news: Reserve Bank governor Michele Bullock has struck a cautious tone about the central bank’s proposal to ban surcharging on card transactions just weeks after the opposition said it would consider blocking the plan if it goes ahead.
Bullock, speaking at the Bradfield Oration in Sydney on Friday morning, delivered a lengthy and detailed speech about modernising the payments system. But she did not go into detail about the review of Merchant Card Payment Costs and Surcharging, which has proven politically controversial.
Instead, she said this was a “good example of attempting to balance not only the desired attributes of the payments system but also the multiple views of providers and users”.
“We are currently consulting on our preliminary views on potential regulatory changes that could be in the public interest, so I won’t discuss these issues further in this speech except to say we are going to take the time to get these changes right,” she said.
The context: In July, the RBA revealed a proposal to ban surcharging on card payments and to reduce interchange fees, which would reduce card revenue by $900 million for local banks. It attracted a sharp response from the banks and from the federal opposition, which said it might use new powers allowing it to intervene on RBA payment system directives to block the change.
Bullock was carefully worded about this particular area and only spoke briefly about it in her speech.
She used the majority of her address to raise her hopes to see the account-to-account payment system modernised, cross-border payments enhanced, more effective measures to combat fraud and scams and strengthened operational resilience.
She specifically raised concerns with the Bulk Electronic Clearing System (BECS) and described it as “ageing” and lacking features expected of a modern payment system and needed to support innovation.
“These include real-time, 24/7 processing and the ability to include detailed payments, both of which are available by the NPP [New Payments Platform’,” she said.
She raised the recently-launched public consultation on the future of account-to-account payments and that the interests of parties “are not necessarily aligned” with trade-offs between payment cost and reliability, innovation and legacy and customer needs versus payment provider priorities to be weighed.
On fraud, she noted banks are implementing their own innovative measures using AI to detect high-risk transactions.
What they said: “Our payments system must remain safe, reliable, low-cost and easy to use – but also innovative and future-ready. Any less would fall short of what Australians have come to expect and limit our economic potential,” Bullock said.
The source: Reserve Bank speech
