Why -

*          is "There relatively limited information available on the risk of credit card lending?
*        were "... card scheme members generally unable to supply suitable capital data ..." regarding "...the margins in Credit Card Issuing and Acquiring ....?

Question 11

RBA's Submission to the Senate Inquiry into Matters Relating to Credit Card Interest Rates - August 2015  (Submission 20) under  'Credit risk to banks' (pg 16) noted that "There is relatively limited information available on the risk of credit card lending?"

Below is an extract from the 2nd paragraph of 5. IMPACT ANALYSIS of RBA Aug 2002, Reform of credit card schemes in Australia IV: Final reforms and regulation impact statement:

"Credit card issuing and acquiring are currently very profitable activities in Australia.  Information provided to the Joint Study by card scheme members showed that the provision of credit card services generates revenues well above average costs, especially for financial institutions which are both significant Card Issuers and Acquirers. The margins are particularly wide in credit card Acquiring (Table 6). Although card scheme members were generally unable to supply suitable capital data, indicative figuring by the Reserve Bank – based on the main risks against which capital would be held – suggested that the margins in Credit Card Issuing and Acquiring were well above what would be required to provide a competitive rate of return on capital.

In view of the Reserve Bank's "...extensive powers ...." under the Payment Systems (Regulation) Act 1998  to gather information from payment system participants and operators, why -

(i)         is "There is relatively limited information available on the risk of credit card lending?; and

(ii)      were "... card scheme members generally unable to supply suitable capital data ..." regarding "...the margins in Credit Card Issuing and Acquiring ....?

Subsequent to August 2015, has the Reserve Bank requested financial information "... on the risk of credit card lending.." from at least the Four Pillars that control 80% of the Credit Card Products, so that it can now quantify that risk?

Summary Page        

Grounds/Reasons (one document with 21 Chapters)

Grounds/Reasons (21 separate Chapters)

Written Questions  (one document with Written Questions)

Written Questions  (Individual Written Questions)