Media Release Reform of Card Payment Systems in Australia

EFTPOS and Visa Debit

Following a decision by the Payments System Board, the Reserve Bank has today designated the EFTPOS debit card payment system in Australia as a payment system under the Payment Systems (Regulation) Act 1998. The Visa Debit payment system was designated in February 2004. Designation is the first step in the possible establishment of standards and/or an access regime for a payment system.

In reaching its decision that designation is in the public interest, the Board carefully considered a wide range of information, including the recent decision of the Australian Competition Tribunal, submissions from interested parties and discussions with those parties.

Throughout its deliberations, the Board has been of the view that the public interest requires it to take account of how EFTPOS interchange fees affect the totality of the payments system, and how the system is likely to evolve over the medium to long term.

In deciding to designate the EFTPOS system, the Board concluded that current interchange arrangements are not conducive to the efficiency of the overall payments system. In particular, the nature of the interchange arrangements contribute to the effective price that cardholders are charged for payments using EFTPOS being higher than for payments using credit cards or scheme-based debit cards. This is despite the EFTPOS system having relatively lower costs. The Board judged that a narrowing of this differential in relative prices and costs would promote the efficiency of the overall payments system.

The Bank will now proceed to consider the desirability of setting standards for interchange fees for both the EFTPOS debit card payment system and the Visa Debit payment system with the objective of improving the efficiency of Australia's payments system.

The Bank will take into consideration any further submissions on these matters by interested parties. They should be lodged by 15 October 2004. Parties making submissions should note that they will be placed on the Reserve Bank's website.

The Bank will release any proposed standards for both payment systems in draft form. As required under the Payment Systems (Regulation) Act, interested parties will have an opportunity for comment before any standards are finalised.

The Board is closely monitoring work being undertaken by the Australian Payments Clearing Association to improve access arrangements for the EFTPOS debit card payment system and will keep under review the question of whether it would be in the public interest for it to impose an access regime under the Act.

ATM System

After considering whether it would be in the public interest to designate the ATM system, the Board has decided not to designate it at this stage. In reaching this decision the Board took note of the desire of many participants in the ATM industry to pursue voluntary reform, with a view to increasing competition in the charges cardholders pay when using so-called ‘foreign’ ATMs.

The Board will continue to monitor the industry's progress on this matter.


Philip Lowe
Assistant Governor (Financial System)
Reserve Bank of Australia

Phone: +61 2 9551 8510

John Veale
Head of Payments Policy
Reserve Bank of Australia

Phone: +61 2 9551 8710

Manager, Media Office
Information Department
Reserve Bank of Australia

Phone: +61 2 9551 8111
Fax: +61 2 9221 5528