Media Release Update on Payments System Issues

EFTPOS Access Regime

In April 2006, as part of its package of debit card reforms, the Reserve Bank announced its intention to establish an Access Regime for the EFTPOS system. The Bank indicated that the Access Regime would be gazetted once the complementary Access Code for the EFTPOS system, being developed by the Australian Payments Clearing Association (APCA), had been formally adopted. The Access Code has now been adopted by the eight institutions that are the members of EFTPOS Access Australia and has been published on its website ( Accordingly, the Bank is today gazetting its EFTPOS Access Regime.

The Access Regime is the result of co-operative work between the Bank and APCA over a number of years. It sets a cap on the price that an existing participant can charge to establish a new connection and includes provisions that will help ensure that negotiations over interchange fees are not used to frustrate entry. Other important aspects of entry are covered in the Access Code. These include providing new and existing participants with the right to establish direct connections with participants in the EFTPOS system and setting a time frame under which connections must be established.

Together with the Access Code, the Access Regime will significantly improve access arrangements for Australia's EFTPOS system.

EFTPOS interchange fees

The Standard on The Setting of Interchange Fees in the EFTPOS System sets out the process for determining a cap and a floor for interchange fees in the EFTPOS system. In accordance with the Standard, using data supplied by acquirers, the Reserve Bank has calculated that the cap to apply to interchange fees in the EFTPOS system for the three years from 1 November 2006 is 5 cents. The Standard sets the floor on interchange fees at 80 per cent of the cap.

Following implementation of these new arrangements, interchange fees which are paid by EFTPOS issuers to acquirers and currently average around 20 cents, will fall to between 4 and 5 cents for transactions that do not involve cash out. This outcome is consistent with that expected when the Standard was released in April 2006.

Pre-paid cards

Over recent months a number of pre-paid cards have been issued in Australia, with the cards having substantially the same functionality as the debit cards issued by the international card schemes. After considering a number of aspects of these cards at its meeting on 22 August 2006, including arrangements for interchange fees, the Payments System Board has decided not to regulate these cards at this time. The Bank, however, expects that interchange fees for transactions on these cards will be published and set broadly in conformity with the Standard on interchange fees in the Visa Debit system, and that merchants will not be prevented from surcharging transactions on these cards if they so choose. The Bank also expects that if a pre-paid card is introduced with features substantially different from a scheme debit card, merchants will not be required to accept that card.

The Bank will consider these matters again in its review scheduled for 2007/08.

2007/08 review

As the Bank has foreshadowed, it will be conducting a review of the reforms to card payment systems, including interchange fees, commencing in the second half of 2007. The Bank is currently considering how this review might best be undertaken and is seeking views on the content and process of the review.

Interested parties are invited to make written submissions to, or to contact, the Head of Payments Policy Department (contact details below) by 13 October 2006.


John Veale
Head of Payments Policy Department
Reserve Bank of Australia

Phone: +61 2 9551 8700

Manager, Media Office
Information Department
Reserve Bank of Australia

Phone: +61 2 9551 9720
Fax: +61 2 9221 5528