Media Release Payments System Issues

Card Surcharging Restrictions – Guidance Note and Commencement Date

At its 16 November meeting, the Payments System Board endorsed a revised implementation date of 18 March 2013 for its variation to surcharging Standards. It also approved a final version of the Guidance Note to support the amended Standards.

In May 2012, the Payments System Board decided to vary the surcharging Standards to allow card scheme rules to limit surcharges to the reasonable cost of card acceptance. The Bank subsequently published two versions of a draft Guidance Note on the varied surcharging Standards. This was in response to indications from a number of interested parties that they would appreciate clarification about the costs that might be included in ‘the reasonable cost of acceptance’.

A number of changes have been made from the previous draft of the Guidance Note, including in relation to the treatment of fraud costs, the taxi industry, and the verification of costs. In the case of the latter, the Guidance Note states that it is the Bank's expectation that merchant service fees and other costs payable to acquirers will typically represent the bulk of the reasonable cost of card acceptance for merchants and that merchants surcharging only for these costs should not be required to provide any additional verification of their costs. The Bank recognises that in a limited number of cases surcharges may appropriately include other costs, and there is nothing in the Standard which prevents a scheme from seeking verification of these costs.

In light of the longer-than-expected period of consultation, the Board concluded that the implementation date for the Variation to the Standards should be delayed until 18 March 2013, to provide the industry with sufficient time to make any changes necessary. The Standards and finalised Guidance Note are available on the Bank's website.

Strategic Review of Innovation – Core Criteria and Amendment of Strategic Objectives

The Payments System Board has endorsed a set of Core Criteria that the Bank will use to assess proposals for provision of real-time (‘fast’) payments for consumers and businesses. The Board also decided to amend its strategic objectives with respect to the introduction of out-of-hours Direct Entry posting.

The Bank published the Conclusions from its Strategic Review of Innovation in the Payments System in June, setting out the high-level strategic objectives that the Payments System Board believes the payments system should be able to meet in the coming years. In response, the Bank received more than 30 written submissions, addressing fast payments, the Direct Entry system, and other elements of the Strategic Review. Overall these responses were supportive of the strategic objectives and indicated that the timeframes proposed were challenging, but achievable. Non-confidential submissions have been published on the Bank's website.

The Strategic Review encouraged industry to engage collectively on a response to the objectives established by the Board. Accordingly, industry has formed a Committee under the auspices of the Australian Payments Clearing Association with a mandate to agree by end 2012 on an industry-based project approach for the delivery of fast payments. Concurrently, the Reserve Bank has been working to develop core criteria against which it will assess proposals.

One of the objectives proposed by the Strategic Review was that consumers should have the ability to make and receive low-value payments outside normal banking hours via the Direct Entry system and any fast payments system by the end of 2016. However, feedback from industry noted the cost of upgrading the Direct Entry system, and indicated a preference for achieving out-of-hours retail payments via a fast payments solution. Accordingly, the Board has decided to amend its strategic objectives to omit this objective for the Direct Entry system and will review this aspect when a fast payments solution is operational.


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