News

ATM surcharge proposal suffers setback in Australia

June 7, 2004

SYDNEY - The lengthy and sometimes contentious process of reforming Australia's electronic payments system has suffered another blow after the country's largest credit union group withdrew from industry negotiations to introduce directly charged user fees for ATMs.

According to a report in the Sydney Morning Herald, Credit Union Services Corp (CUSCAL), which represents 3 million members and the fourth-largest network of ATMs, on June 7 leftt an industry working group believed to be close to submitting a direct fee proposal to the Australian Competition and Consumer Commission (ACCC).

After last month's failure of EFT/POS reforms through the ACCC's so-called "authorization" process, CUSCAL said it would not be part of separate ATM reforms when there was no certainty about the outcome.

CUSCAL's position adds to the pressure on Australia's Reserve Bank (RBA) to intervene in payments system reforms and use the same "designation" powers applied to credit card interchange to tackle EFT/POS and ATM reforms.

EFT/POS reforms failed after an appeal by retailers to the Australian Competition Tribunal. According to the Morning Herald, the Tribunal found the reforms were not in the public's benefit and criticized the lack of evidence provided by banks and the RBA.

Some interest groups have been disappointed at the results of credit card reforms. Many banks have increased other fees, and retailers are the main beneficiaries from reduced service fees and the ability to surcharge for credit.

The proposed ATM reforms would abolish ATM interchange fees paid to card issuers. Instead, cardholders using an ATM not owned by their financial institution would pay an upfront fee to ATM owners.

About 40 percent of all ATM transactions are believed to involve interchange, according to the Morning Herald.

The Australian Consumers Association's Catherine Wolthuizen said it was not surprising CUSCAL did not want to go through the "bruising process" of ATM reform. The reforms would not benefit credit unions and smaller financial institutions, she said.