NSW; Credit card reform to cut cost of all goods, services -UNSW

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NSW; Credit card reform to cut cost of all goods, services -UNSW

SYDNEY, Aug 27 AAP - The Reserve Bank of Australia's (RBA) credit card reform wouldcut the price of all goods and services, a financial services expert said today.

Under the reforms, the hidden fees banks charge for credit card transactions will beslashed by almost half, the system will be opened up to new competitors, and retailerswill be allowed to charge cardholders for the cost of accepting credit cards.

RBA Governor Ian Macfarlane said the sweeping reforms would promote genuine competitionon credit card interest rates and the merchant service fees charged to retailers.

University of NSW Financial Services Consumer Policy Centre director Chris Connollytoday welcomed the changes.

"Consumers had been paying higher prices for goods and services because of the hiddeninterchange fees built into the credit card system," Mr Connolly said in a statement.

"These reforms will replace an expensive hidden fee structure with a cheaper, transparentfee structure.

"It's a rare win for low income consumers who have borne the brunt of these hidden fees."

Mr Connolly congratulated the RBA for pursuing the reforms in the face of stiff oppositionfrom banks and credit card companies.

"Consumers can look forward to interchange fees falling by 40 per cent under the newstandard," he said.

"This will mean lower prices on all goods and services as around $380 million a yearis removed from merchant costs."

AAP hn/arb/ph/sb

KEYWORD: CARDS EXPERT