Transcript of Question & Answer Session What's on the Cards?

I think you made it quite clear to everyone, Tony. Any questions? Sophie over here.

Just in regards to the surcharging. The situations where customers are getting charged, in some cases up to 2 per cent to tap their cards. I did a story on this just a month ago. Does that say to you that there is still a strong need for cash because I know myself, if I'm going to pay 2per cent with my debit card, that's going to make me annoyed when I can pay cash and avoid that charge.

The first thing to note is that the surcharging framework requires that there's always a method of payment that you can use that is not surcharged. So, it's important that the merchant, if they are surcharging 2 per cent for debit, that they make some other method of payment available to you that's not surcharged and it is cash in this case. Another observation I'd make is that if indeed it is costing the merchant 2 per cent to accept tap and go payments, then that might suggest that the merchant should be shopping around for a new payments provider. Or alternatively, it's a very important question that we're asking, can we bring down the cost of electronic payments?

But getting back to your question, we do know that there are many people in the community that still like to use cash and so as long as there is a demand for cash from significant groups of the community, you can be sure that the Reserve Bank will continue to provide bank notes. And I suppose the other point on surcharging is when and if a consumer faces a surcharge that they think is in excess of the cost of acceptance, they should contact the ACCC, but in the event they come to us, we'd be happy to hear the complaint and we'd pass it on to the ACCC if appropriate.

Just two really quick ones. The first is on security and the review that's being done in terms of, or not the review, but the framework that's been put out in terms of card not present fraud. Has there been any progress on the thinking of the bank in terms of sheeting the cost of fraud back to institutions away from merchants because at the moment it largely rests with the merchants who pick up the tab for that and I mean, it's going down but it's not going down by that much.

And there was also a consultation recently on the NPP that came out and I was just wondering if there's any uptake to that?

On the fraud issue, AusPayNet has recently helped introduce a new framework to try to get down card-not-present fraud. And my understanding is that merchants that are implementing all the requirements for card-not-present fraud, probably including two factor authentication et cetera, they probably are not liable for fraud. So, the incidence, if merchants are using best practice, the incidence has probably shifted back to the issuer I suspect.

On the NPP. The NPPA has published its roadmap in October and has also responded to the recommendations of the Reserve Bank and ACCC on governance and access. And the Bank and the ACCC have reviewed the responses of NPP Australia and we are broadly happy with those, that the NPPA has made changes that will be a little bit more access friendly to new, smaller participants. The roadmap is quite ambitious, so ACCC and RBA are broadly happy with that. But in the event that we became aware of any new concerns, we could obviously revisit the issue. But we've said in the report we released in June that we would review this again in two years' time, if not before.

I'm a payments manager for a large eCommerce business and in April this year there was an interchange reset for eCommerce transactions, so, we were slugged with an increase in interchange. My question is, and they weren't ready for scheme tokenization, so my question is, for future interchange resets, what work will the RBA do to ensure that the schemes are ready for this?

I'm not quite sure I understand the issue you're raising. The schemes typically are resetting their interchange schedules once a quarter and that's either to ensure that they remain compliant with the Reserve Bank's benchmarks or to respond to some commercial aspect or perhaps too, if they want to incentivise tokenisation of transactions, et cetera.

The schemes sometimes don't give that much notice of changes. So, I don't know if that's the issue that you're raising, but what I can say is that there are caps on the interchange fees that can be applied to any single transaction. So, no credit card transaction can attract an interchange fee of more than 80 basis points. No debit card transaction can attract an interchange fee of more than 20 basis points or 15 cents.

I'm sure that the schemes aren't applying interchange fees above those caps, but if they were, or if you have any other concerns regarding interchange fees, we're happy to have a submission on them. Or alternatively, if they are confidential issues, we're happy to have a conversation with you.

I'd like you all to join me in thanking, Tony Richards.