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PAYMENTS SYSTEM BOARD ANNUAL REPORT – 2005

Contents

List of tables

Table 1: Reform of Card Payments

Table 2: Credit Card Rewards

Table 3: Interchange Fees, August 2005

Table 4: Proposed Changes to Debit Card Interchange Fees

Table 5: Survey Respondents

Table 6: Use of Bill Payment Methods

Table 7: BPAY Interchange Fees

Table 8: CLS Currencies

Table 1: Reform of Card Payments
CREDIT CARDS
Joint Study announced	Joint Study released	Bankcard, MasterCard and Visa designated Draft standards and access regimes released	Final standards and access regimes released MasterCard and Visa mount legal challenge
DEBIT CARDS
Joint Study announced	Joint Study released		EFTPOS industry working group formed EFTPOS discussion paper released
1999	2000	2001	2002

Table 1: Reform of Card Payments (Continued)
CREDIT CARDS
No surcharge rule abolished Case by MasterCard and Visa heard APRA announces regulatory arrangements for Specialist Credit Card Institutions (SCCIs) Case by MasterCard and Visa dismissed Interchange standard comes into effect Merchant service fees fall	Access regime comes into force Merchant service fees published First SCCI announced	Steering restrictions removed in three-party schemes Common interchange benchmark proposed Market shared published
DEBIT CARDS
Banks seek ACCC authorisation of zero interchange in EFTPOS Banks and APCA to address access to the EFTPOS system EFTPOS authorisation granted Authorisation appealed by merchants	Visa Debit designated EFTPOS authorisation overturned by ACT EFTPOS designated EFTPOS designation challenged by merchants	Draft standards for EFTPOS and Visa Debit released Merchants' EFTPOS designation challenge heard Access code for EFTPOS agreed Access regime imposed on Visa Debit system
2003	2004	2005

..................................................................................................................................

	Average spending required for $100 voucher ($)	Benefit to cardholder as a proportion of spending (bp)
Table 2: Credit Card Rewards


2003	12,400	81
2004	14,400	69
2005	15,100	66

Sources: Banks' websites. ANZ Telstra/Rewards Visa card, Commonwealth Bank MasterCard Awards card, National Australia Bank Visa Gold card and Westpac Altitude MasterCard.

..................................................................................................................................

Table 3: Interchange Fees, August 2005
Per cent of transaction value

	Bankcard	MasterCard	Visa

Standard	0.49	0.62	0.60
Electronic	0.49	0.46	0.44

The electronic rate applies to transactions where the card is swiped and the signature verified. The standard rate applies to most other transactions, including those using manual processing and those over the internet or telephone. MasterCard and Visa also have separate interchange fees for commercial cards.
Sources: Bankcard, MasterCard and Visa websites.

..................................................................................................................................

Table 4: Proposed Changes to Debit Card Interchange Fees

Revenue to issuer: cents per transaction

EFTPOS

Visa Debit*

Difference

Current
-20

+40

+60

Proposed
-5

+15

+20

*For transaction of average size.

Source: RBA

..................................................................................................................................

Table 5: Survey Respondents

Industry	Billers surveyed	Number of bills % of total



Councils	4	1
Financial services	5	8
Government	10	14
Telecommunications	5	49
Utilities	15	25
Other	1	2
Total billers	40	100

Source: RBA

..................................................................................................................................

Table 6: Use of Bill Payment Methods

	Rank of importance – number of billers

Method	1	2	3

Direct to biller
Cash	2	2	2
Cheque	1	4	3
Credit card or
charge card	10	12	7
EFTPOS	0	0	0
Direct credit	0	1	1
Direct debit	3	5	6

Through an agent
Third party
over-the-counter	23	8	3
BPAY	0	7	16
Locked box	1	1	2
Total	40	40	40

Source: RBA

..................................................................................................................................

Table 7: BPAY Interchange Fees^a

Paid by biller's institution to payer's institution

$

% of
transaction
value

Capture reimbursement fees

From deposit account
0.44

—

From credit card account
0.38

0.27

BPAY View fee ^b
0

—

a Excluding GST.

b Paid where payer's institution has implemented BPAY View.

Source: BPAY

..................................................................................................................................

Table 8: CLS Currencies

Currency	Joined CLS

Australian dollar	September 2002
Canadian dollar	September 2002
Euro	September 2002
Japanese yen	September 2002
Pound sterling	September 2002
Swiss franc	September 2002
US dollar	September 2002

Danish krone	September 2003
Norwegian krone	September 2003
Singapore dollar	September 2003
Swedish krona	September 2003

Hong Kong dollar	December 2004
Korean won	December 2004
New Zealand dollar	December 2004
South African rand	December 2004

Source: CLS Bank

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