Credit Card Fees To Soar As Issuers Recoup Costs
The Age
Saturday September 30, 2006
A CREDIT card expert has warned that changes to fees on Visa and Mastercard purchase processing machines could raise the cost to consumers of buying on credit.
Michael Ebstein of MWE Consulting said a 10 per cent fall in "interchange fees" charged between Visa and MasterCard when their machines are used to process one another's cards would be a loss to card issuers. "Given that it is a 10 per cent reduction in one of the key revenue streams, I would expect to see that it would lead to some upward pressure in annual fees and interest rate margins," he said."You would expect that the card issuers will seek to recover it."Card issuers can negotiate fees, but the Reserve Bank sets a ceiling above which the average interchange fee must not rise.The RBA lowered the interchange fee on credit card purchases from 0.55 per cent to 0.5 per cent of the total purchase price - a change Mr Ebstein said was likely to cut about $70 million from issuers' fee income.
© 2006 The Age
