The ACCC found that while there were signs that recent competition from new non-bank entrants is delivering better consumer outcomes through lower prices and improved services there is scope for more competition in the supply of international money transfers (IMTs).
The ACCC’s recommendations include measures aimed at:
- reducing a key barrier to entry and expansion for non-bank suppliers of IMTs, and
- making the prices of foreign currency conversion services (FX services) more transparent for consumers.
Access to banking services
The ACCC says potential gains from increased competition may be lost if non-bank IMT suppliers are unable to access banking services. Non-bank IMT suppliers often rely on obtaining banking services from their vertically integrated competitors (banks) to compete for the supply of IMTs.
The need to comply with Australia’s anti-money laundering and counter-terrorism financing (AML/CTF)laws has been a factor in the banks’ decisions to withdraw access to banking services for non-bank rivals (known as de-banking). To address this issue, the ACCC recommends a scheme through which IMT suppliers can address the due diligence requirements of the banks, including in relation to AML/CTF requirements.
Due diligence scheme for access to banking services
The ACCC recommends that the Australian Government should form a working group tasked with consulting on the development of a scheme through which IMT suppliers can address the due diligence requirements of the banks or providers of payment system infrastructure, including in relation to AML/CTF requirements.
It recommends that by 31 December 2020, the scheme should be operational or the Working Group should have set out any alternative approach it will initiate to ensure that non-bank IMT suppliers are able to obtain efficient access to the banking and payment services they need to compete in the supply of IMT services to Australian consumers.
Measures to improve how prices are presented to consumers
Up-front correspondent banking fees: IMT suppliers should take the necessary steps to inform their customers up-front of the total price of an IMT, including correspondent banking fees.
Online calculator: Suppliers of IMTs and foreign cash should offer digital tools on their websites to calculate the total price for those services for consumers.
Foreign cash prices on rate boards: Foreign cash suppliers should ensure that they provide price information that will enable an in-store consumer to understand the total price of foreign cash transactions.
Disclosure of international transaction fees: Merchants offering goods and services online to Australian consumers should inform consumers if they are likely to be charged an international transaction fee. Merchants should provide this information prominently and clearly before a customer enters into a transaction. If consumers are charged an unexpected international transaction fee, they should contact their bank or card scheme to request a refund of the fee.