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RESERVE BANK OF AUSTRALIA

Annual Regulatory Plan

Payment Systems 2013–14

As at 1 August 2013

The Reserve Bank, like other Australian Government agencies, is required to publish an annual regulatory plan on its website each year. The regulatory plan deals with the Payments System Board's area of responsibility and contains information about:

  • changes to business regulation that have occurred since the beginning of the previous financial year; and
  • activities planned in the current financial year that could lead to changes to business regulation.

A regulatory plan covers business regulation. This includes primary legislation, subordinate legislation, quasi-regulation or treaties that have a significant impact on business. Quasi-regulation refers to rules or arrangements where governments influence businesses to comply, but which do not form part of explicit government regulation.

The regulatory plan does not include information on:

  • regulations of a minor or machinery of government nature that are unlikely to substantially alter existing arrangements;
  • regulations that involve consideration of specific Government purchases;
  • regulations of a state or self-governing territory that apply in a non-self-governing territory; and
  • anticipated activity about which it would be inappropriate to publish information on grounds of confidentiality.

In addition, there may be some regulatory activities that the Reserve Bank is unable to forecast. In view of these exclusions, readers should not take this regulatory plan to be a comprehensive source of information on past and likely future changes to business regulation. The Payments System Board also oversees the Reserve Bank's contributions to a number of initiatives coordinated by the Council of Financial Regulators. These include the development of a legislative framework for OTC derivatives regulation, and implementation of a package of reforms to the regulation of financial market infrastructures in Australia. These initiatives are included in the Annual Regulatory Plans for other agencies of the Council of the Financial Regulators.

It should also be noted that there are no other regulatory activities of the RBA that need to be reported in terms of these requirements.

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Section 1: Past Regulatory Changes

Title Variation to Access Regime for the ATM System
Description of issue

In August 2012, the Payments System Board of the Reserve Bank decided to vary the Access Regime for the ATM System. The variation extended the Bank's powers to grant exemptions for ATM arrangements that would otherwise be counter to the interchange provisions in the Access Regime. The variation provides the Bank with more flexibility to facilitate ATM arrangements that it considers appropriate and consistent with the intent of the Access Regime. Further information is available from A Variation to the Access Regime for the ATM System: Conclusions.

Date of effect 29 August 2012
Contact details Tony Richards
Head of Payments Policy Department
Reserve Bank of Australia
Phone: +61 2 9551 8700
Fax: +61 2 9551 8024
E-mail: richardsa@rba.gov.au
Date last modified 31 July 2013
Title Variation of the Standards relating to merchant surcharging of credit and scheme debit cards
Description of issue

In May 2012, the Payments System Board of the Reserve Bank decided to vary the Standards relating to merchant surcharging of credit and scheme debit cards. The Reserve Bank published an amended draft Guidance Note on the varied surcharging Standards in November 2012, and at the same time amended the commencement date from 1 January 2013 to 18 March 2013. The variation allows card scheme rules to limit surcharges to the reasonable cost of card acceptance. The variation continues to ensure that merchants can fully recover their card acceptance costs.

The decision to vary the Standards reflected the Payments System Board's concerns about the increase in cases where surcharges appear to be well in excess of acceptance costs or where surcharges are ‘blended’ across card schemes, even though merchants' acceptance costs may be higher for some cards than others. The Payments System Board intends that the variation will improve price signals by enabling a card scheme to address cases where merchants are clearly surcharging at a higher level than is justified for acceptance of its card products.

Date of effect 18 March 2013
Contact details Tony Richards
Head of Payments Policy Department
Reserve Bank of Australia
Phone: +61 2 9551 8700
Fax: +61 2 9551 8024
E-mail: richardsa@rba.gov.au
Date last modified 31 July 2013
Title Variation of Standard: Interchange Fees in the EFTPOS System
Description of issue

In November 2012, the Payments System Board of the Reserve Bank decided to move the regulation of bilaterally negotiated EFTPOS interchange fees to a basis that is consistent with other EFTPOS interchange fees and those of the international debit schemes. This change is intended to enhance competition between EFTPOS and the international debit schemes by placing them on a more consistent regulatory footing.

The Board initiated a review of the EFTPOS regulatory framework early in 2012 to ensure that regulation continues to meet its objectives in light of changes that have occurred in the system in recent years. Those changes include a shift from a system characterised by bilateral agreements between participants, to one that is centrally managed by ePAL. In 2009, in recognition of ePAL's capacity to set interchange fees in the interests of the system, the Board moved multilateral EFTPOS interchange fees (those set by ePAL itself) to the same 12 cent cap as applies to the international debit schemes. Now that most participants have adopted multilateral fees, the Board has decided that it is appropriate for bilaterally negotiated fees to be subject to a similar cap.

These reforms and their rationale are discussed in more detail in the Regulation Impact Statement.

Date of effect 1 July 2013
Contact details Tony Richards
Head of Payments Policy Department
Reserve Bank of Australia
Phone: +61 2 9551 8700
Fax: +61 2 9551 8024
E-mail: richardsa@rba.gov.au
Date last modified 31 July 2013

Information on payments system reforms that took place prior to 1 July 2012 can be found at Reforms. Information on any prior determinations and variations of the Financial Stability Standards for Clearing and Settlement Facilities can be found at Standards. Enquiries about reforms and standards may be directed to:

Tony Richards
Head of Payments Policy Department
Reserve Bank of Australia
Phone: +61 2 9551 8700
Fax: +61 2 9551 8024
E-mail: richardsa@rba.gov.au

Section 2: Planned Regulatory Activities

Title Revocation of the Access Regime for the designated EFTPOS System
Description of issue

In 2012 the Reserve Bank conducted a review of the EFTPOS regulatory framework to ensure that regulation continues to meet its objectives in light of changes that have occurred in the system in recent years. Those changes include a shift from a system characterised by bilateral agreements between participants, to one that is centrally managed by ePAL.

In November 2012, the Payments System Board of the Reserve Bank made an in-principle decision to revoke the existing Access Regime for the EFTPOS system once satisfactory access arrangements are put in place by eftpos Payments Australia Limited (ePAL). The Access Regime for the EFTPOS system was developed to address issues largely arising from the bilateral nature of the system. It contains ‘no-discrimination’ provisions relating to the bilateral negotiation of interchange fees and a cap on charges that can be levied on a new entrant for the establishment of a connection to an existing EFTPOS participant. The Board has concluded that ‘no-discrimination’ provisions are no longer necessary given that new entrants can access the multilateral interchange fees set by ePAL.

The Board has also concluded that it can remove the Access Regime’s cap on connection charges (including any need for transitional arrangements) once it is satisfied that ePAL has in place suitable access arrangements. These changes are intended to enhance competition between EFTPOS and the international debit schemes by placing them on a more consistent regulatory footing. The EFTPOS system reforms and their rationale are discussed in more detail in the Regulation Impact Statement.

Consultation opportunities On 12 July 2012, the Reserve Bank issued a media release inviting interested parties to provide formal written submissions by 31 July 2012. Submissions have been posted on the Reserve Bank's website and those making submissions have been provided with the opportunity to discuss their submission with the Bank.
Expected timetable The Reserve Bank anticipates that the revocation of the Access Regime will occur in the first half of 2014.
Contact details Tony Richards
Head of Payments Policy Department
Reserve Bank of Australia
Phone: +61 2 9551 8700
Fax: +61 2 9551 8024
E-mail: richardsa@rba.gov.au
Date last modified 31 July 2013
Title Consultation on Payment Card Access Regimes
Description of issue In May 2013, the Reserve Bank initiated a consultation on the access regimes applying to the MasterCard credit and the Visa credit and Visa debit systems. These access regimes were originally designed to expand access for issuer and acquirer participants in the card schemes in Australia, and stemmed from the concern that the schemes' restrictions on entry had not struck the right balance between competition in the payments system and the financial safety of the schemes. However, recent developments had suggested that the access regimes in their current form might no longer be fulfilling their original objective, and might now be preventing some prospective scheme participants from entry. Accordingly, the Payments System Board sought the views of interested parties on the scope for modification or revocation of the regimes.
Consultation opportunities On 28 May 2013, the Reserve Bank issued a media release inviting interested parties to provide formal written submissions by 8 July 2013. Submissions have been posted on the Reserve Bank's website and those making submissions have been provided with the opportunity to discuss their submission with the Bank.
Expected timetable Subject to the consultation process, the Reserve Bank anticipates that any changes to the Access Regimes will be implemented in late 2013 or early 2014.
Contact details Tony Richards
Head of Payments Policy Department
Reserve Bank of Australia
Phone: +61 2 9551 8700
Fax: +61 2 9551 8024
E-mail: richardsa@rba.gov.au
Date last modified 31 July 2013