I didn't entirely like the prepared letter to the RBA from don'tpassthe buck, so I modified it to the following.
"I am writing to express my concerns about the Reserve Bank’s plans to increase costs on consumers.
In the RBA’s consultation paper on credit card payment standards, the RBA proposes to further regulate interchange fees. I am advised that this will mean higher credit card interest rates, higher annual fees, while interest-free periods will be cut, and reward points will be slashed.
The RBA already tried this in 2003, and as a result we were slugged with billions of dollars in extra fees. Now the RBA wants to make this even worse. Like millions of Australians, I rely on my credit card – and I do not like higher fees from RBA interference in what is supposed to be a free market.
I am advised that the proposed regulations will particularly affect credit cards linked to rewards or frequent flyer programs. I really value my rewards program, and rely on this to keep my travel costs low while my wife and I fly around Australia, and provide benefits to the Australian tourist industry.
Businesses are the ones who benefit from the fraud protection and other services that interchange fees bring. The RBA shouldn’t give into their lobbying and pass the buck onto my family and me. Does the RBA really want this proposed action to become the subject of future case studies at Business Schools as to confirmation of Stigler's theory of economic regulation (that regulations mainly benefit those being regulated)?
I strongly urge the RBA to make a decision in the best interests of Australian consumers by not making credit card regulation even worse.
While the RBA, in my opinion, contemplates slugging consumers in Australia, I note that it has done little to seriously question the foreign exchange fees charged by Australian banks on credit/debit card foreign transactions. Typically, they are at around 3%, but I have seen them even higher, and just about everybody that I know pays them (or are conned into buying expensive travel cards). Yet American organistions operating in Australia - for example, Citibank and GE Money - charge no such foreign exchange fees (and no annual fees for that matter) and appear to oeprate quite profitably, and frequently giving wine or cash rewards to their clients.
Plainly inertia or lack of information results in Australian credit/debit card users getting slugged in the manner that they already subject to. Why add to their burden?
I look forward to hearing from you."
