Reform of Australia's Payments System 1. Introduction

This document sets out the Payments System Board's preliminary conclusions of its review of the regulation of Australia's card payment systems. It is the product of a process that commenced with the publication of an Issues Paper in May 2007 and has involved a large number of submissions and extensive consultation with industry participants, including a conference in November 2007. The document discusses the main options considered and the Board's preferred course of action.

The origin of the Review was a commitment made by the Payments System Board when it released its final reforms for the credit card systems in 2002. The Review has been wide ranging, and has covered all the reforms to the card-based payment systems in Australia. The Board thanks all those who made submissions and took time to meet with the Bank's staff as part of the Review.

The structure of this document is as follows. Section 2 sets out the Board's mandate and objectives, and Section 3 provides details on the current regulatory landscape. Section 4 then summarises the consultation process and the various views raised by industry participants. The Board's assessment of the main issues is set out in Section 5, while Section 6 discusses the various options regarding interchange fees, including the Board's preferred approach. The main conclusions of the Review are then summarised in Section 7, while Section 8 provides details of the next steps in the process.

The conclusions set out in this document are preliminary. The Board is seeking submissions on these conclusions and on the analysis set out below. Further details are provided in Section 8. The final conclusions of the Review will be published in late August/early September 2008.