Editorial: RBA targets card fees after leaving interest rates untouched

It might not be an interest rate cut, but this Reserve Bank decision will nonetheless be greeted warmly, writes the editor.

Reserve Bank governor Michele Bullock addresses the media last week. Picture: Christian Gilles/NCA NewsWire

The Reserve Bank of Australia has finally made a decision which will be greeted with warm applause by the vast majority of Australians.

Sadly, it is not the cut in interest rates that we all expected last week.

But it is an idea which will appeal to millions of Australian consumers who are increasingly bewildered by the fees and charges that seem to nibble away at their credit and debit cards every month.

The RBA has suggested the removal of surcharge fees for tapping a card on eftpos, MasterCard and Visa.

RBA Governor Michele Bullock says it is important to keep pace with evolving ways of payment and ensure Australia remains safe, competitive and efficient.

The idea is part of the central bank’s consultation with industry and, if given the green light, could be implemented within 12 months.

If accepted, it would also bring us in line with many other countries.

These fees and charges on our cards are complex, but you can be pretty much assured they will be extracted each time you tap a card.

The retailer is usually charged a cost to accept the payment, and that cost finds its way to all financial parties involved in the transaction. They might include a bank as well as payment platforms the retailer has signed up with.

The retailer can then pass the transaction costs on to the customer with a surcharge, but the retailer is not legally entitled to make any extra money on the arrangement.

The result is a murky state of affairs which, though not necessarily illegal, can leave the consumer wondering exactly where on earth that extra bit of money they pay every day (usually without complaint) is going.

Bullock says reviewing such charges is just part of the central bank’s attempt to address high costs and inefficiencies in our financial system.

And the costs of the surcharge to the consumer can be eye-watering.

Bullock estimates that Australian consumers could save up to $1.2bn annually if the cuts were implemented.

The banks may not like it. But our banks are not exactly strapped for cash in the manner of ordinary Australian households.

A still sticky inflation rate has combined with high interest rates and a housing crisis to create a financial storm for millions of Australian families.

A spare $80 after the week’s household expenses are taken care of can be a cause for celebration and a Sunday night takeaway.

By comparison, it is estimated that in the last financial year the big four banks made a pre-tax profit of more than $44bn.

It should be noted that the RBA proposal is not without a few snags.

The RBA’s own consultation papers reveal that, if the proposal went ahead and businesses raised their prices to compensate for the removal of surcharges, inflation would increase by around
0.1 per cent.

But Treasurer Jim Chalmers seems to be on board with the RBA’s proposal.

Mr Chalmers notes the slow decline of cash, ever since the Covid era, has made the electronic system dominant across Australia, which means that more Aussies are getting slugged for using their own money.

He says the payments system is complex, but the RBA’s review and consultation paper is an important step in reducing costs to Australian consumers. And that can only be a good thing.

HEROES TO THE RESCUE

It’s a story that perfectly illustrates what is wrong with regional Queensland, and also why it’s the greatest place on Earth.

Five innocent people were injured in Townsville on Monday night when an allegedly stolen car stuck their vehicle.

Unfortunately, car theft and joy-riding have become commonplace in Townsville, sometimes with tragic results.

On this occasion, five innocent people – a mother, father, two children and their grandmother – were injured and left hanging in their seatbelts after their vehicle came to rest on its side when it was hit by a ute.

As the dust settled and terrified screams rang out from the family trapped in the car, neighbours and bystanders swung into action.

One man detained a passenger from the allegedly stolen vehicle, while Brooke Tomkies – who has four young girls herself – ran to help the injured.

“I ran straight over to the car and helped all the neighbours get the little girl out, it just broke my heart, it was shattering, I was thinking of my own kids,” Ms Tomkies said.

All five people in the car were taken to Townsville University Hospital with minor injuries.

It was the US children’s TV legend Fred Rogers who said “look for the helpers” when trying to deal with confronting events.

On Tuesday, Townsville gave us the perfect example.

Responsibility for election comment is taken by Chris Jones, corner of Mayne Rd & Campbell St, Bowen Hills, Qld 4006. Printed and published by NEWSQUEENSLAND (ACN 009 661 778). Contact details here

Originally published as Editorial: RBA targets card fees after leaving interest rates untouched