Provisionally Unlawful Bank Fees In Oz

Provisionally Unlawful Bank Fees In Oz

A furore is breaking out in Australia after a consumer watch dog ruled yesterday that the way some bank fees were now set was "provisionally unlawful." John Howard reports.

Banks could be forced to change their fees after the Australian Competition and Consumer Commission (ACCC) ruled on claims by retailers that banks are charging them merchant fees on the newly introduced GST component of credit card purchases - costs the merchant will have to pass on to customers.

Any changes would affect the amount of fees banks charge businesses for processing credit card, ATM and Eftpos transactions.

The ACCC chairman, Professor Alan Fels, said that banks would have to reset their fee structures in liaison with the Commission if it deemed that bank fees were set through collusion, were anti-competitive and unlawful.

"If, as we suspect, some of these methods are unlawful, then the banks will have to seek authorisation for some other way of setting fees," Professor Fels said.

"We haven't got the power to set prices, but we do have the power to overturn the present methods by which certain fees are determined," he said.

Concern about the anti-competitive nature of bank and credit card fees is a festering international issue.

In the US, Wal-Mart and other retailers have filed a writ seeking multi-billion dollar damages from Visa and Mastercard for alleged anti-competitive behaviour over debit cards.

All of which will leave New Zealand business-people wondering if banks are also charging them fees on the GST component of credit card purchases.

Or whether the cash money they bank each day, which will include a GST component, has cash handling fees attached to the total

It must raise the question that if a business banks, say, $1,000 in cash or cheques, 12.5% will be GST which must be paid to the government.

For example, is it fair if the banks charge a cash handling fee on the 12.5% GST? - And if so, shouldn't the Government be paying that part of the cash handling fee - not the business?

Feedback to Scoop is welcome. Please send to jhoward@minidata.co.nz.

© Scoop Media