How the RBA f&*ked over the non-bank banking sector

March 30, 2009 — Leave a comment

On March 3, the Reserve Bank in Australia (RBA) abolished bank intercharge fees on ATM’s in favor of a pay to use system where consumers pay a rate determined by the owner of the ATM.

This was allegedly about reducing charges for consumers, and providing a more transparent charging regime.

SMH March 24

Reserve Bank assistant governor of financial system Philip Lowe says the reforms of ATM fees, which came into affect on March 3, have increased competition and benefited consumers.

Dr Lowe said that across the entire system most cardholders were paying no more for ATM transactions than previously and some “may have the opportunity to play less”.

What has happened since March 3 is that most foreign ATM’s (that is, ATM’s not owned by the bank you bank with) now impose a $2 withdrawal charge.

In theory, you can opt not to cop the fee by only using your own banks ATM. But what if your bank or bank like institution doesn’t have ATMs, or more particularly an accessible supply of ATM’s.

My credit union doesn’t.

Until March 3 I could use any ATM and not cop a charge. As of April 1 (the Credit Union is rebating the fees this month) I’ll have to pay money to withdraw money from an ATM.

Oh, but you can use EFTPOS or the PostOffice. Great. The reason I switched to my current Credit Union is because my last Credit Union ran the same line and I never had free use of ATMs. The current credit union has teamed up with some other credit unions for the “Redi” ATM network, but the nearest one is 10 kms away and no where near anywhere I regularly go.

So the RBA says that I should be saving money, but now I’ll be paying fees where I never have before, and there’s really no 24/7 alternative.

Thing is, there are still a fair few small credit unions around with a similar setup, particularly employee related Unions.

In effect, the RBA has actually done more in entrenching the big four and reducing competition than it ever has before. Little credit unions can’t compete on ATM’s, and customers want access to fee free ATM’s. The big four with their army of ATM’s win out.

An epic failure in public policy.

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