Interchange fees are a controversial topic in many markets around the world, but the debt is often focused on swipe fees charged for consumer payments. A new initiative gaining momentum in Australia would ban interchange fees altogether – and according to reports, the effort includes commercial card swipe fees.
Reports in iTnews on Wednesday (Aug. 8) said that Commonwealth Bank of Australia (CBA) Chief Executive Matt Comyn is speaking out against efforts to nix interchange fees on electronic card payments.
The interchange fee ban proposal was put forth in a dramatic report issued by the government’s Productivity Commission as it assesses competition in the nation’s financial services market. When the Commission released its report last Friday, it called for reforms to restructure the now $1 trillion in electronic payments that are regulated in Australia, replacing traditional operating structures with “an open access regime for critical shared infrastructure” like the existing New Payments Platform (NPP), as well as a ban on the interchange fees that currently provide billions of dollars in revenue to card companies, according to iTnews.
While CBA’s Comyn has signaled support for that open access regime for the NPP, he spoke out against a ban on interchange fees for card payments made online.
“Australia overall has [some] of the lowest interchange fees in the world,” he said. “I don’t think there is a single developed payments market that has zero interchange.”
He also urged the market to wait for existing regulations by the Reserve Bank aimed at reducing the burden of interchange fees on merchants to make an effect on the market. Banning interchange fees outright, he said, would have a negative financial impact for the CBA, and could ultimately harm business and consumer payers.
“Part of that interchange is then used to provide fraud protection, for example, and continued investment in the payments industry,” Comyn said.
According to Grant Halverson, CEO of McLean Roche Consulting, interchange fees from commercial card payments account for more than $46 billion in revenue for card issuers. It is unclear how much of that spend is made online, however.