SYDNEY -- The average cost of ATM transactions in Australia is expected to fall with the elimination of ATM interchange fees.
According to a report in The Australian, interchange fees will be eliminated under reforms initiated by the Reserve Bank (RBA) and now being backed by the Australian Bankers' Association (ABA), credit unions and the ATM industry.
Proponents are suggesting that surcharging, in which any fees are disclosed at the ATM at the time of the transaction, may replace the interchange system.
The average foreign fee paid by customers for using another bank's ATM is $1.05 (about 64 cents U.S.), according to the Australian. The RBA has concluded the real cost of providing the service is half that, and wants to get rid of the fee.
The total cost passed on to the card holder has been between $1.30 and $1.50 (about 79 cents and 91 cents, U.S.)
Scrapping the interchange fee will mean a loss of revenue to the banks of about $230 million (about $140.8 million U.S.), according to the Australian.
While the ABA does not believe that customers have been charged too much for using foreign ATMs, it argues that consumers stand to gain if interchange is eliminated. "The average price of ATM transactions will fall," ABA Chief Executive David Bell said.
Although banks will have to declare how much they charge, under the proposal no cap on fees is proposed.
But the Australian Consumers Association (ACA) doubts consumers stand to gain from the reforms. ACA finance policy officer Catherine Wolthuizen said transparency in fees did not necessarily lead to a reduction in fees.
"If appropriate protections are not put in place I think there is a risk that consumers will not realize the savings banks stand to get out of these reforms and they can also end up paying more," Wolthuizen said.
Getting rid of interchange fees on ATM transactions is the third part of the RBA's overhaul of the credit and debit card sector, with a goal of greater transparency and increased competition.
While credit card reform was forced on the banking sector, according to the Australian, banks have taken a more active role in ATM and point-of-sale fee reform by forming working parties that have produced proposals.
