More of the payments systems in Australia will potentially subject to regulatory intervention, because following a resolution of the Payments System Board, the Reserve Bank has designated the American Express companion card system, the Debit MasterCard system and the eftpos, MasterCard and Visa prepaid card systems under the Payment Systems (Regulation) Act 1998.
The Board determined that it was in the public interest to designate these systems, having regard to the desirability of payment systems being efficient and competitive.
Designation does not impose regulation; rather it is the first of a number of steps the Bank must take to exercise any of its regulatory powers. Any proposals to apply regulation to designated systems through standards or access regimes are subject to requirements for detailed consultation.
Designation of these five systems will allow a more holistic consideration of the issues as the Bank undertakes the current review of the regulatory framework for card payments and considers the case for changes to that framework. The Board expects to discuss these issues at its November meeting.
This may lead the way to reconsidering the level of interchange fees between the transacting parties, especially where the payment systems are closed rather than open.
In its March 2014 submission to the Financial System Inquiry (FSI), the Bank indicated that it would be reviewing aspects of the regulatory framework for card payments, including the issuance of companion cards, interchange fee arrangements in card systems and surcharging practices. The Final Report of the FSI endorsed the broad nature of the Bank’s reforms over the past decade or more but noted a few areas where the Inquiry believed the existing regulatory framework could be improved.
The Bank released an Issues Paper in March 2015, inviting submissions on a broad range of issues in card payments regulation, including those raised in the FSI Report. The Bank received over 40 submissions, with non-confidential submissions published on its website. It hosted an industry roundtable in June and has held around 40 meetings with stakeholders. Consistent with the Board’s instructions in August, Reserve Bank staff conducted liaison with the relevant schemes in September ahead of the decision to designate.
