Ban on bank cards?

Press, 8 December 1978, Page 1

Ban on bank cards?

PA Wellington The Examiner of Commercial Practices (Mr A. E. Monaghan) said yesterday that card schemes being introduced by trading banks in New Zealand seemed likely to have effects contrary to the public interest. Reporting on his investigation of complaints about the Bank of New Zealand's Visa-card scheme, he said the schemes should be investigated by the Commerce Commission. A problem arose from the fact that although the schemes seemed likely to have effects contrary to the public interest they were not trade practices described in section 23 of the Commerce Act against which the Commerce Commission could make orders. “There is, however, provision for trade practices not referred to in section 23 to be brought within the scope of that section by Order in Council made pursuant to recommendations of the commission,” said Mr Monaghan. “I have recommended that the commission take this action and submitted a report in support of this view. Further action now rests with the commission which may decide to hold an inquiry to consider my recommendation.”

Mr Monaghan said his investigations into the Visacard system had shown that it had so far had only

limited acceptance. Unless it was accepted more widely, the ■ system would appear likely to have little effect contrary to the public interest. “I am, however, aware that the Australia and New Zealand Banking Group, the Bank of New South Wales, and the Commercial Bank of Australia have plans to introduce the Australian Bankcard system and the National Bank intends to introduce its own version of Visa card,” said Mr Monaghan.

"I have also taken into account the existing operations of American Express and Diners Club,

“I have, therefore, judged

it necessary to consider not only the present situation but also the situation when all banks are working some form of credit or debitcard system and when these systems are more widely accepted than Visa is at present.” The Commerce Act provides that where the Commerce Commission considers the introduction or continuance . of. certain trade practices would be contrary to the public interest, it can make an order:

— Directing the discontinuance or prohibiting the introduction of the practice.

— Permitting the intro-

duction or continuance of the practice subject to certain conditions.

— Directing that in order to remove the consequences of the practice the person carrying it out should revert to trading conditions existing before the trade practice was entered into.

The general manager of the Bank of New Zealand (Mr B. Smith) said he was pleased the examiner had noted that the card would have little effect contrary to the public interest. The bank would just have to wait on the outcome of,the examiner’s recommendation to the commission.