Media Release Reform of the ATM System in Australia

At its meeting on 27 August 2007, the Payments System Board considered an industry-developed proposal for reform of the ATM system in Australia. The proposal involves liberalising access to the ATM system and making pricing more transparent to users of ATMs. It has been developed by the Australian Bankers' Association (ABA) and its members, and has benefited from widespread input following industry-wide meetings facilitated by the Reserve Bank.

The key elements of the proposal are:

  • the development of an objective and transparent access code by the Australian Payments Clearing Association (APCA), setting out the conditions that new entrants are required to meet, the rights of new entrants, and the requirements on current participants in dealing with new entrants;
  • the clear disclosure of any charges levied by the ATM owner before the customer proceeds with a withdrawal, with the customer able to cancel the transaction at no cost; and
  • the abolition of the bilateral interchange fees paid by banks and other financial institutions to ATM owners for the provision of ATM services. These fees – which average around $1 per transaction – are neither transparent to customers nor subject to the normal forces of competition. With these fees abolished, ATM owners will be free to charge customers who use their ATMs but must disclose the fee, increasing the overall transparency of pricing.

Under this proposed reform model, multilateral interchange fees in sub-networks – either those currently in existence (in the Rediteller and Cashcard networks) or those that may form in the future – would be possible. However, the Board's view is that if such fees exist, they should be publicly disclosed. In addition, the rules that govern access to sub-networks should be transparent and objective and not impair efficiency and competition in the payments system.

While an industry agreement has been reached on the broad shape of the reform model, a number of technical details still need to be finalised. One of these is how best to give certainty to a system of zero interchange fees. While the Board would be prepared to consider designation of the ATM system and the setting of these fees to zero through an access regime, this is not its preferred approach. Instead, the Board is encouraging industry participants to address this issue directly, perhaps as part of the implementation of the new access rules being developed by APCA.

As to timing, the Board recognises that the proposed reforms represent a significant change to the ATM system in Australia, and that financial institutions need adequate time to change systems and communicate with their customers. The ABA has suggested a starting date for direct charging of the end of 2008, while others have suggested that the reforms could be implemented more quickly. On balance, the Board is of the view that 12 months should be enough time for the relevant framework to be in place and therefore expects that the new regime would commence no later than 1 October 2008. The Board is also asking the ABA and APCA to provide it with quarterly reports on progress in implementing the reforms. These progress reports will be made public.

The Board welcomes the proposed reform model which meets the public policy concerns identified in November 2005. When implemented, these reforms will significantly increase the transparency to consumers of the fee charged for withdrawing cash from an ATM. Consumers will be able to see the fee charged by the ATM owner on the screen of the ATM at the time of the transaction, and will be given the option of cancelling the transaction if the fee is too high. Also, the Board expects that the removal of the hidden interchange fees will lead to substantial reductions in, and perhaps the abolition of, the ‘foreign’ fees that most banks currently charge their customers for using ATMs owned by another institution.

The reforms are also expected to lead, over time, to more ATMs in a wider variety of locations, increasing choice to consumers. They are also likely to promote increased competition in the provision of ATM services, with new ATM operators more easily able to enter the system to provide ATMs in both new and existing locations.

The Board acknowledges the significant concessions made by some industry participants in reaching agreement on this reform package. Although the process has taken some time, the reforms represent a successful example of the industry and the Bank working together to improve competition and efficiency in the Australian payments system.


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

Phone: +61 2 9551 8500

Ms Michele Bullock
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 8111
Fax: +61 2 9221 5528