A Variation to the Access Regime for the ATM System: Consultation Document – May 2012 Background

A case for considering an expansion of the Bank's exemption powers under the Access Regime has become evident in light of a proposal by the ATM industry to establish a scheme to reduce the sizeable expenditure on ATM fees by residents of very remote Indigenous communities. The scheme has been formed following the work of a joint Treasury/Reserve Bank ATM Taskforce (the Taskforce), which found that a typical cardholder living in a very remote Indigenous community spends much more on ATM transactions than other Australians. This reflects a lack of alternatives to paying a direct charge each time these cardholders need to make a balance enquiry or access cash at an ATM; at these very remote locations, cardholders typically only have access to one independently owned ATM and, therefore, do not have access to charge-free ATM services.

As part of its work, the Taskforce engaged with the ATM industry to work towards reducing the expenditure on ATM fees by residents of very remote Indigenous communities who lack access to alternative banking facilities. The scheme proposed by ATM industry participants is likely to involve financial institutions – including the major banks – making payments to independent ATM deployers to enable cardholders in selected very remote Indigenous communities to access existing ATMs free of direct charges. These payments may, however, be counter to provisions relating to interchange fees in the Bank's Access Regime.

The Access Regime, which was put in place as part of the broader ATM system reforms in 2009, eliminates the payment of interchange fees between participants in the ATM system, except in two sets of circumstances.[1] The first is where a common multilateral fee is paid between members of an ATM sub-network. The second is where a fee is paid in respect of a one-way arrangement, where an institution pays a fee to an ATM network owner so that its cardholders can access that network without paying a direct charge. The Bank considered that these exceptions would benefit competition by allowing smaller institutions to provide their customers with charge-free access to a larger network of ATMs than the institutions could provide themselves. However, the Bank sought to avoid the possibility that these exceptions would lead to the redevelopment of a network of bilateral fees. The Access Regime therefore prevents an issuer from putting in place more than a single one-way arrangement, and from being both a payer and a receiver of interchange fees under one-way arrangements.

The proposed scheme for very remote Indigenous communities may involve some participants that already receive interchange fees in one-way arrangements also being required to pay fees in one-way arrangements established for the purpose of the scheme – counter to the interchange fee provisions of the Access Regime. Paragraph 16 of the Access Regime currently provides the Bank with the power to grant an exemption to the prohibition on interchange fees for ATM transactions (paragraph 11 of the current Access Regime) under certain circumstances, but that power does not extend to the provision that prevents a participant from being both a payer and a receiver of interchange fees under one-way arrangements (paragraph 12). Therefore, the industry's proposed scheme may be able to proceed in its current form only if the ATM Access Regime is varied.


See Reserve Bank of Australia (2009), An Access Regime for the ATM System, February. Available at <www.rba.gov.au/payments-and-infrastructure/atms/access-regime/atm-access-0209.pdf> [1]