Media Release Review of the Reforms to Australia's Payments System

The Bank has today released ‘Reform of Australia's Payments System: Issues for the 2007/08 Review’. The release of this paper begins the formal process of consultation for the Bank's review of the payments system reforms of recent years.

The paper sets out details on the timing and scope of the review and provides a summary of the reforms and their rationale. The paper also raises a number of specific issues on which the Bank is seeking comment from interested parties.

As previously announced, the review will be broad in scope. It will examine not only the effects of the reforms to date, but also how, looking forward, the regulatory regime can best contribute to competition and efficiency in the Australian payments system. In particular, the review will examine what has changed since the reforms were introduced and how any changes might bear on the appropriate regulatory regime in the future.

Reflecting the broad scope of the review, the paper raises three interrelated questions:

• (i) what have been the effects of the reforms to date?
• (ii) what is the case for ongoing regulation of interchange fees, access arrangements and scheme rules, and what are the practical alternatives to the current regulatory approach? and
• (iii) if the current regulatory approach is retained, what changes, if any, should be made to the standards and access regimes?

Within each of these questions, the paper sets out a series of more detailed issues on which the Bank is seeking evidence and analysis.

Submissions are due by 31 August 2007, and should be sent to:

Head of Payments Policy Department
Reserve Bank of Australia
GPO Box 3947
SYDNEY NSW 2001

or

pysubmissions@rba.gov.au

All submissions will be placed on the Bank's website and those making submissions will be invited to discuss the submissions with the Bank.

As part of the review process the Bank will also co-host, with the Centre for Business and Public Policy at the Melbourne Business School, a conference in Sydney on 29 November 2007. The conference will bring together academics, practitioners and policy makers to address a number of issues regarding the recent reforms. The Bank is also conducting two significant studies as inputs to the review. The first is a study of the resource costs associated with different methods of payment, and the second is a study of how various payment methods are used by consumers in different situations. The results of these studies will be available by November this year.

The Bank expects to release its preliminary conclusions from the review – including details of the general directions the Board is considering – for consultation in April 2008.