Review of Retail Payments Regulation – Consultation Paper

The Payments System Board has published a Consultation Paper containing the Board’s preliminary conclusions of its Review of Retail Payments Regulation. The paper also includes for consultation some draft standards that would implement the preliminary conclusions. The Board expects to reach its final conclusions in the second half of 2021.

Dual-network debit cards and least-cost routing
The Reserve Bank would state an explicit expectation that the major banks will continue to issue DNDCs, with both DNDCs and single -network debit cards to be provisioned in all relevant form factors offered by the issuer (such as in mobile wallets as well as physical cards).
The Bank’s interchange standards would be amended to set a lower cents-based interchange cap for SNDC transactions than for DNDC transactions. 
The Bank would state an expectation that all acquirers and payment facilitators (which provide card acceptance services to merchants) will offer and promote LCR functionality to merchants in the device-present (in-person) environment.
The Bank would state an expectation that the industry will follow a set of principles regarding the implementation of LCR in the device-not-present (online) environment.
The Bank would explicitly prohibit schemes from engaging in ‘tying conduct’ involving their debit and credit card products.

Interchange fees
The Board is proposing to reduce the cents-based debit interchange cap from 15 cents to 10 cents for DNDCs (and all prepaid cards) and 6 cents for SNDCs

Scheme fees
Schemes would 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 would also be required to provide quarterly data on scheme fee revenue and rebates to the Bank.

The Board is not proposing to require any ‘buy now, pay later’ (BNPL) providers to remove their no-surcharge rules at this time but considers that a policy case could emerge in the future and will keep this issue under review.

Digital wallets
The Board does not propose any regulatory action in the digital wallet market at this stage.

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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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