As a small business that pays more than 4 per cent in merchant fees per subscription, we have first hand experience of the credit card cartel and look forward to the Reserve Bank finally meting out some justice to these rip-off merchants such as ComBank CEO David Murray and Mastercard which have shown real chutzpah with recent statements.

In last week’s AFR David Murray the CEO of the Commonwealth Bank and Chairman of the Australian Bankers (Burglars) Association is reported to have stepped up his attack on credit card reforms. He is again publicly resisting the intention of the Reserve Bank to reform the credit card pricing racket run by Australia’s banks.

It is unlikely that the Reserve Bank will call David Murray to account on this occasion — as they never have, publicly, before when they had just cause. Bland press reports of what David Murray says are thus akin to letting him have a free kick to the collective community groin.

One would like to think that David Murray would put some substance behind his rhetoric. The RBA’s detailed and well argued report on the credit card racket has been out for two months. One might have thought that left plenty of time for David Murray to draft a response and put it on the public record. Instead we get self-serving words from the boy banker that are all show, all shadow and no substance.

There is no doubt that David Murray would have been ‘briefed’ repeatedly in recent years about the features of credit card schemes — including price fixing — that many find objectionable. He would have been briefed again in the wake of the RBA report. Is he saying ‘hand on heart’ that those briefings do not identify clearly the public offence of credit card schemes? Is this public posturing designed to be the foundation for a legal challenge to the decisions of the Reserve Bank due to be formalised in mid-year? Will the banks defence of their credit card schemes only be made available in the course of protracted court proceedings.

This boy needs to be brought to book — and made publicly accountable for his lack of candour when speaking to the community about the credit card business in which he is involved.

As the time draws near for the Reserve Bank to pull the regulatory plug on the worst excesses of banks’ credit card schemes it is to be expected that their cohorts — especially MasterCard and Visa — will step up the rhetoric to defend the price fixing that is against the public interest. MasterCard fired a very loose shot on Valentines Day — and ‘Crikeys’ banking commentator recognises it for the self serving pap that it is.

MASTERCARD GIVES AUSTRALIANS NO CREDIT

On Valentines Day MasterCard said to Australians what we always suspected — ‘no’, “we don’t still love you in the morning”.

Two months after the Reserve Bank of Australia gathered the gumption to say that banks’ credit card schemes, MasterCard and Visa, operate contrary to the public interest, MasterCard has issued a contradictory media statement.

MasterCard could have said it carefully considered the concerns identified by the Reserve Bank (and the UK Treasury et al) and then addressed those concerns in a forthright way. Instead, MasterCard’s statement was an exercise in ‘ducking and weaving’. It uses emotional words in the emotional ways that one associates with not being straightforward. Emotional words conscripted to its cause — “rural community”, ‘community banks”, “small retailers”, “battlers”, and “pensioners” — were used to align vulnerable groups in the community. MasterCard seeks to build ‘fear’ that is directly contradictory to the assessment of the Reserve Bank — that it is these groups that are disadvantaged by the pernicious consequences of price-fixing by credit card scheme promoters.

Gentle readers may like to reflect on the Reserve Bank promise to deal soon with the ‘appropriation’ as interchange fees of some $ 1 billion each year by member banks of the MasterCard and Visa schemes from the Australian community. Gentle readers will realise that Australia will thus set a precedent for other countries to similarly ‘deal with’ the similar ‘appropriation’ of global revenues of some $A50+ billion per annum. Gentle readers will then be a little sceptical about the claim in the media release that “MasterCard reluctantly decided to go public with its concerns , 05. “. The more likely probability is that with some $50+ billion a year at risk, MasterCard realises the game is about up and (like Visa already) is fighting to defend the indefensible.

This is not the place to canvass the issues about the mechanics of price fixing in credit card schemes. Rather the point to put to those that would defend ‘credit card schemes’, is to ask why banks do not attach an ‘overdraft’ line-of-credit to customers EFTPOS, debit-card accounts. Included in a truthful answer to this question would be words to the effect that credit card schemes, with their ‘hidden’ price fixing, are a contrivance against the public interest.

MasterCard does itself (and its member banks) no credit by issuing a statement to the media that is self-serving and disrespectful of the Australian community.

MasterCard’s Valentines Day message should be returned to sender, with the annotation, ‘not appreciated’.

Feedback to Peter Mair at [email protected]

Peter Fray

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