RBA 'is a reluctant regulator of credit card fees'

The Reserve Bank of Australia (RBA) is not yet sure whether more competition or direct regulation is needed to reduce credit card fees.

RBA assistant governor Malcolm Edey said in a speech that the bank had not made a decision on further fee regulation.

However, he added that it would prefer to see fees kept down by promoting competition rather than by implementing direct reforms. This would make it easier for people to compare credit cards in search of the best deals.

"We believe there’s been good progress in promoting competition over recent years. But its not yet clear whether that will be sufficient," said Mr Edey.

He noted that a review of card payment reforms by the RBA in 2007-08 had found that its regulation to date had delivered lower costs to merchants and increased competition and transparency regarding fees.

The RBA reported last week that the amount owed on credit cards dropped from $46.912 billion in December to $46.152 billion in January, perhaps showing that people are being more cautious with their spending.

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