Review of Retail Payments Regulation Summary of Submissions to the Review of Merchant Card Payment Costs and Surcharging Consultation Paper

Other issues

Implementation timeline

The RBA received a range of feedback on whether the proposed six-month implementation timeline for the proposed reforms was appropriate. Most consumer submissions stated that this was either adequate or too long and conveyed that they would prefer the removal of surcharging to take place sooner. However, some merchants and payments industry stakeholders stated that six months would be too short to fully implement the reforms given the scale of the changes across the entire policy package.

Submissions from the payments industry generally indicated that nine to 12 months would be required to implement the full reforms, with a few submissions stating that 18 months or more would be required. Some implementation issues that stakeholders raised were:

  • Merchants that surcharge may need to update their pricing, renegotiate contracts with their PSP and reconsider what payment methods to accept. Merchants in industries with regulated pricing may find this more onerous.
  • Merchants may need to shop around for a better payment plan or renegotiate with their current provider if their ability to surcharge is removed. However, PSPs may not have adjusted and published their pricing to account for lower interchange fees by the time merchants are seeking to shop around if surcharging is removed at the same time as interchange is lowered.
  • Some issuers may choose to reassess their offerings if their interchange revenue were to be reduced. Some issuers indicated that they would need to update their terms and conditions with their customers and provide ample notice of any changes to product offerings.
  • The need for acquirers and PSPs to reconfigure terminals for any removal of surcharging. There were a wide range of views among PSPs on the difficulty of implementing any removal of surcharging.
  • Card schemes would need to change their interchange fees and this could lead to renegotiation of rates across the industry, including strategic merchant rates with large merchants.

Draft standards

Comments on the draft standards generally focused on the intent of the policy proposals rather than the specific form or wording of the draft standards themselves. Most comments on the draft standards related to:

  • Complex terminology and desire for further clarification on some of the definitions in the draft standards to ensure consistent reporting across participants. Some stakeholders stated that the RBA should publish worked examples or guidance notes to aid merchants’ understanding of their statements.
  • The lack of enforcement mechanisms in the draft standards for LCR expectations and scheme fee expectations.