Review of Retail Payments Regulation Conclusions Paper

The Reserve Bank’s Payments System Board has released a Conclusions Paper setting out various policy actions, together with amendments to the Bank’s standards for card payment systems, which will contribute to a more efficient and competitive payments system.

The Bank’s Review has coincided with the Treasury’s separate Review of the Australian Payments System (the Treasury Review), which has investigated whether the broader regulatory architecture of the Australian payments system remains fit-for-purpose.

The key conclusions of the Bank’s Review are:

1. The Board strongly supports the issuance of dual-network debit cards (DNDCs), and the provision of Least-cost routing (LCR) functionality to merchants.

The Bank has adopted a policy framework for DNDCs and LCR which includes:

  • The Bank expects all acquirers and payment facilitators (which provide card acceptance services to merchants) to offer and promote LCR functionality to merchants in the device-present (in-person) environment.
  • The Bank expects all acquirers, payment facilitators and gateways to offer and promote LCR functionality to merchants in the device-not-present (online) environment by the end of 2022.

2. The Board’s view is that interchange fees should generally be as low as possible. the Bank will reduce the cap on debit (and prepaid) interchange fees that are set in cents terms from 15 cents to 10 cents. The Bank will amend the interchange standards to require schemes to publish interchange fees on transactions on foreign-issued cards on their websites.

3. Schemes will be required to provide the Bank with access to their scheme fee schedules and all scheme rules, and to notify the Bank promptly of any changes to these. Schemes will also be required to provide quarterly data on scheme fee revenue and rebates to the Bank.

4. The Board has concluded that it would be in the public interest and consistent with its mandate to promote competition and efficiency in the Australian payments system for buy now, pay later providers to remove their no-surcharge rules.

Separate to the Review, the Board has taken a decision to grant an exemption from aspects of the Access Regime for the ATM System, to enable card issuers to access other participants’ ATM fleets in order to provide cardholders with wider access to fee-free ATMs.

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David Jacobson

Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.

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