Media Release Payments System Issues:

A Variation to the Surcharging Standards

At its meeting on 18 May, the Payments System Board decided to vary the Standards relating to merchant surcharging on credit and scheme debit cards. The variation allows card scheme rules to limit surcharges to the reasonable cost of card acceptance. The variation continues to ensure that merchants can fully recover their card acceptance costs.

The decision to vary the Standards reflects the Board's concerns about the increase in cases where surcharges appear to be well in excess of acceptance costs or where surcharges are ‘blended’ across card schemes even though merchants' acceptance costs may be higher for some cards than others. The Bank intends that its variation will improve price signals by enabling a card scheme to address cases where merchants are clearly surcharging at a higher level than is justified for acceptance of its card products.

The variation to the surcharging Standards and the rationale for the Board's decision are discussed in detail in the attached Regulation Impact Statement. The varied Standards will come into force on 1 January 2013.

The Bank has noted that some parties in consultation expressed a desire for more clarification as to the meaning of ‘the reasonable cost of acceptance’ in the varied Standards. The Bank is therefore giving consideration to publishing a guidance note. A draft Guidance Note is attached to the Regulation Impact Statement. It makes clear that at a minimum the reasonable cost of acceptance includes the merchant service fee, but it may also include a range of other costs. Parties wishing to comment on the draft Guidance Note should contact the Head of Payments Policy Department by 20 July at:

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

or

pysubmissions@rba.gov.au.

The EFTPOS System: New Designation and Consultation on the Future Regulatory Framework

The Payments System Board has decided to implement a new designation for the EFTPOS system to reflect changes in the structure of the system since it was first designated in 2004. The new designation will be narrow in scope, defining the EFTPOS system based on the Scheme Rules of EFTPOS Payments Australia Limited (EPAL).

The Bank is now launching the second phase of its review of the EFTPOS system. This consultation seeks views on options for the Bank's future regulation of EFTPOS interchange fees and access to the EFTPOS system, including on whether an interchange fees standard and/or an access regime are required. In addition, given the large shift that is taking place in both the governance and the regulatory framework for the EFTPOS system, the consultation also seeks views on whether transitional arrangements may be appropriate and on their form.

The Bank has prepared a paper discussing the Board's reasoning for its decision on the new designation for the EFTPOS system and outlining possible options for the future regulatory framework. The paper also contains a draft interchange fees standard that reflects the Board's preliminary view on its preferred approach to the regulation of bilateral EFTPOS interchange fees, and a draft access regime that reflects possible access provisions should the Board decide that they are appropriate as part of the future regulatory framework. The Bank is seeking views on these issues from interested parties. Formal written submissions should be provided by no later than 31 July 2012 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.

Submissions provided by email should be contained in a separate document, in PDF, Word or equivalent format.

In the normal course of events, submissions will be posted on the Reserve Bank's website and those making submissions will be provided with an opportunity to discuss their submission with the Bank.