Media Release Reform of Debit Card Systems in Australia

MasterCard Debit and Visa Debit

In April 2006, the Reserve Bank released a package of reforms to Australia's debit card systems, including Standards to apply to Visa Debit interchange fees and Visa's ‘honour all cards’ and ‘no surcharge’ rules. The Bank indicated that these Standards would be gazetted only if, by 1 July 2006, Visa had not provided the Bank with an undertaking that would deliver the same outcomes as the Standards.

The Bank also indicated that it would consider designating the MasterCard debit system and determining standards if MasterCard did not provide an undertaking to the same effect. MasterCard has provided such an undertaking and, accordingly, the Bank has not seen a need to consider designation of the MasterCard debit system.

After consultation with the Bank, Visa has not provided an undertaking. Given this, the Bank has today gazetted standards for the Visa Debit system. These standards are the same as those released in April, with minor modifications to ensure competitive neutrality between MasterCard and Visa.

As a result of these reforms, from 1 November 2006 the average interchange fee for a MasterCard or Visa debit transaction is expected to fall from around 40 cents to around 15 cents. In addition, from 1 January 2007, merchants will no longer be obliged to accept a scheme's debit cards as a condition of accepting its credit cards.

The rationale for these changes is discussed extensively in the Bank's media release of 27 April 2006 and the accompanying Regulation Impact Statement.

EFTPOS Access Regime

In April 2006, the Bank announced that it would gazette an Access Regime for the EFTPOS system once the complementary EFTPOS Access Code, being developed by the Australian Payments Clearing Association (APCA), was finalised. The Bank expects that the new access arrangements for the EFTPOS system will be in place shortly.