Payments Changes Could Challenge Commonwealth Bank

Dow Jones
09/14

0125 GMT - Commonwealth Bank could face a tougher earnings outlook from Australia's payments reforms than business-oriented rivals, Citi analysts warn. From next month, Australian card surcharges will end and interchange fee caps will be lowered to 30 basis points from 80 basis points. Citi's analysts observe that cards and payments remain important fee pools for the country's banks, accounting for 12% of industry fees through household credit cards. They warn in a note that extra pricing transparency may lead consumers to increasingly weigh fees against benefits, which may support challengers. The analysts think banks with greater reliance on retail fees, particularly Commonwealth, may face extra headwinds at a time when mortgage margins are already compressed.

 

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