ABA CEO Simon Birmingham transcript of interview on ABC RN Breakfast with Sally Sara

E&OE
Radio Interview
ABC RN Breakfast with Sally Sara
Wednesday, 24 September 2025.

Sally Sara (Host): Reserve Bank Governor Michelle Bullock has hit out at Australia's big four banks for standing in the way of making shopping cheaper for customers. The RBA wants to ban surcharges on card payments. To fund the ban, it wants to dramatically cut the interchange fees paid by retailers for accepting cards. The Australian Banking Association argues the cuts will make it harder for banks to invest in scam and fraud prevention. A name you might know, Simon Birmingham, a former Liberal Senator, is now the new chief executive of the Australian Banking Association, and joins me now as Simon Birmingham, welcome back to breakfast.

Simon Birmingham (Guest): Good morning, Sally. It's great to be able to speak with you again.

Sally Sara: What are these interchange fees?

Simon Birmingham: So, interchange fees sit in the background to essentially fund the payment system. We've seen people, of course, embrace digital payments as a transition on from credit cards over the years. The growth in credit cards, debit cards significant for our payment system, and now, more recently, this huge growth in digital wallets as a way those payments materialise. Back in 2018 the digital wallets only accounted for around $1 billion worth of payments, wow that's running at around $20 billion per month. So, it's a sector that's seen huge change, but within that huge change, huge change in the players as well, that whilst banks fund the payment system and its operation, and we now see players like Apple Pay, Google Pay, increasingly taking a larger share of those sorts of interchange fees, which is all part of the changing dynamic within the system.

Sally Sara: And to be clear, if someone is paying with a credit card, these interchange fees apply. Do they apply when a debit card is used?

Simon Birmingham: There are different levels of interchange fees that apply. And yes, the payment system, in terms of all of those aspects of how money moves from one place to another, does so safely and securely with minimal risk of fraud and scams occurring. These are all important costs that do need to be funded for it to operate effectively.

Sally Sara: You've previously said that the banks might limit investment in scam and fraud prevention to recoup the losses of revenue from these fees. The Reserve Bank Governor Michelle Bullock said this week that any bank that did that would be quote, 'shooting itself in the foot'. Is she right?

Simon Birmingham: Sally, the point that we've made is that these interchange fees are a crucial way of funding that fraud and scam prevention. That indeed the industry spend on technology has grown some 15 per cent just in the last year to around $9 billion. Not all of that goes into fraud and scam prevention, but a very large part does, and that is something that banks will, of course, continue to prioritise for the protection of their systems and of their customers. But as the Reserve Bank has also said, if it's not funded through these sorts of means, and if banks are incurring costs in their payment systems, they'll then have to be funded elsewhere, and that elsewhere that the RBA has pointed to in various work includes higher upfront fees or shorter interest free periods.

Now we back the banning of surcharging. We think customers do deserve to know when they're quoted a price that it is the price they will be paid, and so we think that makes sense, but we think there are better alternatives than the Bank's proposals around interchange that they should consider. Firstly, they should consider a comprehensive review that actually includes the costs of things like Apple Pay and Google Wallets.

Those digital wallets are excluded because until just a couple of weeks ago, the RBA didn't actually have the power to look at how it regulated those sectors. We would really welcome the Bank using that power and undertaking a more comprehensive look at the fee structures, rather than just hitting the Australian banks and ignoring the multinational technology companies, as the current proposal does.

Sally Sara: On a separate issue, ANZ Bank faces a record $240 million penalty for engaging in unconscionable conduct following an investigation by ASIC. Why does this keep happening?

Simon Birmingham: It shouldn't happen, and the firm words from the Prime Minister, the Treasurer, the ASIC chair, were appropriate in making clear that the number of mistakes that were identified should not have occurred, and the fact that a record fee has applied and the reputational damage that an announcement like this has been incurred, I would expect that every chief executive and every board has laid down the law to their teams in relation to the standards that must be met, and that Australians rightly expect to be met.

Sally Sara: The ANZ, NAB at Westpac and the Commonwealth is set to cut 1000s of jobs. Why do banks need to shed so many jobs right now?

Simon Birmingham: We do see huge changes in the in the banking market. Brokers now account for around 70 per cent of all home loan transactions that occur, around 30 per cent of all small business transactions, and whilst banks have grown their head count by an estimated 20 per cent in the last five years, the competition driven by that increased use of brokers and the like, really is driving a tightening in net interest margins in banks, and these are pressures that individually different banks will have to look at.

In some cases, it's a redirection of roles, but again, not all, but that redirection is often into areas like technology, where there's increasing, of course, need to invest. But as I say, elsewhere, it's a recognition that the sector is ever more competitive and facing new cost pressures in relation to the role of things like those digital wallets I mentioned earlier.

Sally Sara: Simon Birmingham, thank you for your time this morning.

Simon Birmingham: Thank you Sally, my pleasure.

Ends