Financial Service 14 Oct. 2014 Shaun Drummond

The government has agree to abolish the requirement for credit card issuers and processors to have a banking licence, in a move it hope will reduce fees to consumers and merchants.

But experts say big banks’ stranglehold on card issuing and acquiring, and the low margins in the business may still prevent competition.

The vast majority of credit cards are issued and acquired (meaning they allow businesses to accept credit card payments) by licensed banks or specialist credit card institutions (SCCIs).

Only two companies have bothered to get an SCCI licence: Tyro Payments and GE Capital.

Many others, such as supermarkets and airlines, issue credit cards, but do so via banks or SCCIs because the capital requirements are too high to take out a licence.

The Reserve Bank recommended the change in March after a four month review.

It is understood about 10 organizations want to compete with banks and providers to become direct issuers or acquirers of cards.