RBA 'reluctant to regulate credit card fees'

The Aussie credit industry still requires an element of regulation, according to the country's central bank.

The Reserve Bank of Australia (RBA) described itself as a "reluctant regulator" of the country's credit card industry.

Malcolm Edey, assistant governor of the RBA, explained that the central bank would prefer to see fees held down by competition than direct regulation, but warned that he did not know whether rivalry in the sector is currently sufficient.

Speaking to the Cards and Payments Australasia 2010 Conference in Sydney, Mr Edey suggested that he was not presently in a position to predict the result of the RBA's next decision on regulation.

However, the assistant governor did identify that interchange fees are "still too high", despite declining from around 95 basis points in 2008 to an average of 50 points.

The RBA carried out a review on Aussie credit payment reforms in 2007, discovering that they had so far lowered costs and increased transparency and access.

He said: "We believe there's been good progress in promoting competition over recent years. But it's not yet clear whether that will be sufficient."

Last month, the Sydney Morning Herald reported that credit card fee-cutting is "well-entrenched" in the country's retail banking industry.

By Joe Letts