Regulation Impact Statement – Reserve Bank of Australia
On 22 October, the Reserve Bank of Australia (the Bank) concluded its Review of Retail Payments Regulation.
The Regulation Impact Statement (RIS) accompanying this decision investigates three policy problems relating to the Retail Payments System: dual-network debit cards (DNDC) and least-cost routing (LCR), interchange fees, and scheme fees. The RIS analyses a number of viable policy options, and the results of consultation on these options.
The Bank’s preferred policy option on DNDC and LCR is to make explicit the expectation that issuers with more than 1 per cent of the debit market would issue DNDCs in all form factors, and that all acquirers and payment facilitators would offer and promote LCR for both device-present and online transactions. The industry would be expected to follow a set of principles in developing LCR online. The weighted-average interchange fee on single-network debit cards (SNDCs) would be limited to 8 cents. The Bank would seek voluntary undertakings from card schemes that they will not engage in tying conduct.
The preferred option on interchange fees is to reduce the cap on cents-based debit interchange fees to 10 cents, and require the publication of interchange fees on foreign-issued cards.
For scheme fees, the Bank’s preferred option is to require disclosure of scheme fee rates and rules. Schemes and some scheme participants would be required to report periodic data on scheme fees to the Bank.
The RIS estimates the average annual regulatory costs of the preferred options combined at $0.641 million.
Please note: any accessibility queries should be directed to the Reserve Bank of Australia.