PSB rule RBA remain regulator for bank fees and EFTPOS

The Payment System Board (PSB) has ruled that after its monitoring of all bank, credit fees and EFTPOS transactions, the regulation lf such activities will remain with the Reserve Bank of Australia. The PSB said that it believes that there was lack of competition in the payments market and it would be far better for the industry as a whole to remain under RBA regulation.

The PSB investigation commenced after the RBA asked the banking industry to improve the present EFTPOS network in September 2008 through the development and implementation of an efficient online payments process. The PSBV has now released its report stating that insufficient process made, resulting in the renewed regulation of the RBA.

The RBA issued a statement saying that "The board has now concluded that, although progress has been made in both of these areas, it is not yet sufficient to warrant a decision to step back from interchange regulation."

In addition to monitoring this progress, the banks were also monitored on their ability to provide voluntary undertakings which ensure that "interchange fees" never rise to an increased amount.

However, it was not all bad news for the bank industry under the PSB report with the findings also stating that banks had indeed progressed since September 2008. Due to this self made progress and momentum to meet the RBA's regulations, the PSB will not now have to force action to make any bank reduce the average interchange fees.

Australian Payments Clearing Association chief executive Chris Hamilton addressed the issue in a recent media release from the association, saying that the association was pleased that the PSB had recognised efforts from the industry.

Mr Hamilton said "In line with the PSB's thinking, we believe that such initiatives will exert significant competitive pressures over time. However, today's decision does leave the long-term regulatory framework for consumer payments in Australian hanging, with no clear end date."

"Uncertainty about how and when the regulators will respond makes such collaborative effort that much harder. We will seek greater clarity from the RBA."

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