The Australian Competition and Consumer Commission has proposed authorising an agreement between members of an ATM sub-network not to charge each others cardholders a fee for transactions at ATMs owned by members.
Authorisation provides immunity from court action for conduct that might otherwise raise concerns under the competition provisions of the Trade Practices Act 1974. Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.
Recent reforms to Australia's ATM system, introduced by the Reserve Bank of Australia in conjunction with the banking industry, mean that customers can be charged directly by ATM operators for withdrawals. Most banks do not charge their own cardholders for withdrawals.
The reforms allow sub-networks to operate where financial institutions continue to charge each other for their cardholders' transactions, rather than charging the cardholder directly. These sub-networks address concerns that under direct charging smaller financial institutions will be at a competitive disadvantage as they cannot offer customers direct fee-free transactions at as many ATMs as the big banks.
The ACCC has issued a draft determination proposing to authorise an agreement between participants in a 'Feesmart' branded sub-network not to charge each others customers fees for ATM transactions.
Instead of charging the cardholder a direct fee, Feesmart members will continue to charge each other a fee for ATM transactions undertaken by their cardholders. Each will independently decide whether to pass this fee on to its cardholders.
"The ACCC considers the proposed arrangement will be pro-competitive, helping to ensure that smaller financial institutions are not at a competitive disadvantage to the big banks as a result of reforms to the ATM system," ACCC Chairman, Mr Graeme Samuel, said.
The Feesmart scheme is in its infancy, however the applicants will seek to expand the membership.
The draft determination will be available from the ACCC website via the 'Public registers' and 'Authorisations and notifications registers' links.
The ACCC is seeking submissions from interested parties in relation to the draft determination before making its final decision. Parties wishing to make submissions should do so by 9 April 2009. Please refer to the website for further information about making a submission to the ACCC.