Media Release The Operation of the Interchange Standards: Conclusions and Variation of Standards

After consultation with industry, the Reserve Bank has decided to implement the proposals it put forward in February to vary Standards No 1 and No 2 of 2016 to improve the clarity and operation of the net compensation requirements of the Standards. The Bank will also implement its proposed transitional arrangement to the varied Standards.

The Standards limit interchange fees in designated card payment systems. The net compensation requirements were introduced in 2016 and are designed to prevent circumvention of the limits on interchange fees by arrangements involving non-interchange payments or other incentives being provided by schemes to issuers.

The variations that will give effect to the proposals have been modified relative to those set out in the Bank's Consultation Paper published in February. These modifications are to improve the clarity, minimise compliance burden, or support the operation of the Standards, and incorporate the considerable feedback provided by stakeholders during the consultation. These include modification to the definition of a ‘Core Service’.

The variations to the Standards have been approved by the Payments System Board, and will take effect from 1 July 2019. The variations are relevant for designated card schemes and issuers participating in those schemes. The Bank will implement transitional arrangements that provide issuers with the flexibility to transition to compliance with the varied Standards either this reporting period ending 30 June or the next.

The Conclusions Paper sets out details of the Bank's consultation on the proposals, stakeholder views and the Bank's assessment and conclusions. The text of the Standards, as amended for the variations, is provided in Appendix A of the Conclusions Paper. Documents have been published on the Bank's website setting out (i) the variations relative the current Standards, and (ii) modifications to the version of the varied Standards proposed in the Consultation Paper.

Correspondence with the Bank related to compliance with the Bank's Card Payments Regulations should be sent to: cardsregulation@rba.gov.au