The regulatory framework includes the Standard, The Setting of Interchange Fees in the EFTPOS System (‘interchange fees Standard’) and the Access Regime for the EFTPOS System. The industry’s EFTPOS Access Code also plays an important role in determining the competitive environment for the system.
Much of the current regulatory framework was put in place prior to the establishment of the new management structure for the eftpos system under eftpos Payments Australia Limited (ePAL). The framework, therefore, did not anticipate the changed governance arrangements for the eftpos system or the possibility of a change in the structure of interchange fees. It also did not anticipate the move to new industry network arrangements under the Community of Interest Network (COIN).
Given these important changes, the Board has decided to review aspects of the regulatory framework for the eftpos system to ensure it continues to meet its objectives. Among other things, the review will consider the role of the ‘no-discrimination’ provisions of the Access Regime. The provisions of the interchange fees Standard dealing with multilateral interchange fees came into force in January 2010, with the express intention of allowing ePAL to determine multilateral fees, subject to the same cap as the scheme debit systems. These provisions will not be considered as part of the current review.
Should the Bank conclude that there is a need to consider varying the regulatory framework for eftpos, it will undertake public consultation, as required by the Payment Systems (Regulation) Act 1998.
Card Surcharging Review
In June 2011, the Bank initiated a public consultation on potential changes to its Standards on payment card surcharging. It received a large number of submissions from interested parties and during July and August met with many of those that made submissions. The Board discussed the various views put forward during consultation at its August meeting and will consider further the surcharging Standards at its next meeting in November.
The Standards, determined in 2002 and 2006, prevented the credit card and Visa Debit card schemes from placing restrictions on surcharging by merchants. The Bank believes that the Standards have improved the efficiency of the payments system, by providing better price signals to cardholders. However, it noted in June that some surcharging practices may be reducing the effectiveness of the original reforms. This includes instances of surcharges well in excess of card acceptance costs. It therefore sought views on allowing card schemes to place some limits on the level of surcharging.
In February 2011, the Board encouraged industry parties to agree on the terms under which multi-function cards are issued. In particular, it noted requirements for the provision of confidential data to competitor systems and the imposition of fees by one payment system on another system’s transactions. The Bank has been monitoring developments on these specific issues, as well as other issues that might affect current or future issuance and use of multi-function cards. The Board encourages a continuation of negotiations by all interested parties. It will consider the issue further at its November meeting.