The central bank has repeated its threat to cut interchange fees in the cards payments system, if industry participants can’t meet a mandate to enhance market competition.

The Reserve Bank of Australia’s payments system board says it is prepared to step back from regulating direct fees paid by merchants to card companies when customers use their cards, if the industry shows it can take the appropriate steps.

But the board said in a statement on Wednesday, about its last meeting on May 15, that it had not seen sufficient progress in addressing these concerns.

“The board indicated that if it did not see sufficient progress in addressing these concerns by August 2009, it would retain interchange regulation and further lower interchange fees in the credit card, scheme debit and EFTPOS systems,” it added.

“The board will be considering these issues again at its August meeting, with a view to deciding whether sufficient progress has been made in addressing its concerns to enable it to step back from interchange regulation.”

The board has been looking for industry participants to consider ways to improve the ability of the EFTPOS system to compete with international card schemes and offer more transparent scheme fees.

It also favours the development of an alternative online payments method - either by the EFTPOS scheme or some other channel - as another way of enhancing competition.

The board said much remained to be done before it could be comfortable that an online system could be a viable and competitive alternative to international schemes.

AAP