The FSI is not only going to impact the banks
Last year’s final report from the Financial Services Inquiry made a large number of recommendations. These included lowering the cap on the maximum interchange fee a bank is allowed to charge on a credit card transaction. The FSI also recommended that merchant surcharges better reflect the cost of accepting the payment method. The surcharge limits set by the PSB would make it easier to prevent over-surcharging. Using the example below, the FSI is recommending there be a cap on the fee paid by the Merchant Service Provider (Box D) to the Customer Service Provider (Box B). Importantly, the FSI recommends that the cap include all payments made to customer service providers. The cap is to include companion cards and incentive fees as well as any other payments to issuers to prevent circumvention of the interchange standards. (VIEW LINK)
Roger Montgomery founded Montgomery Investment Management, www.montinvest.com in 2010. Roger brings more than two decades of investment, financial market experience and knowledge. Roger also authored the best-selling investment book, Value.able.