EXPLANATORY STATEMENT

 

Select Legislative Instrument 2010 No. 279

 

 

Issued by authority of the Treasurer

 

 

Payment Systems (Regulation) Act 1998

 

Payment Systems (Regulation) Amendment Regulations 2010 (No. 1)

 

The Reserve Bank of Australia (RBA) has put in place reforms to promote competition and efficiency in the Australian payments system. These reforms are part of a broader suite of reforms undertaken by the RBA since 2004 which are designed to strengthen competition in the provision of EFTPOS payment services and increase efficiency in both the EFTPOS system and Australia's payments system as a whole.

The RBA designated the EFTPOS system on 6 September 2004, and following a meeting of the Payments System Board (PSB) on 28 March 2006, released a package of reforms to the EFTPOS and scheme debit systems.

The reforms to the EFTPOS and scheme debit systems were developed over a number of years and followed an extensive public consultation process. The reforms included the introduction of an interchange fee Standard for the EFTPOS system which placed a floor on fees at four cents (paid to the acquirer) and a cap of five cents. The Standard was introduced to encourage price signals and behaviour that will promote the development of a more efficient payments system in Australia. The Standard is also expected to ensure that prospective improvements in arrangements for participation in the EFTPOS system cannot be undermined by negotiations over interchange fees.

On 27 November 2009, the RBA varied the EFTPOS Standard, based on the advice of the PSB. The purpose of the variation is to promote competition and efficiency in the Australia payments system by making the regulation of multilateral interchange fees in the EFTPOS system more consistent with that of the scheme debit system. The varied EFTPOS Standard imposes a cap on the weighted average of multilateral interchange fees set by the newly established EFTPOS scheme (EPAL) of 12 cents paid to the issuer – the same as for scheme debit interchange fees. The variation of the EFTPOS Standard is expected to enhance the ability of the EFTPOS system to compete with the international debt card schemes. The varied EFTPOS standard does not change the way in which bilateral interchange fees are regulated. Bilateral interchange fees on purchase transaction will remain regulated between 4 and 5 cents paid to the acquirer.

In order to protect participants complying with the EFTPOS Standard, anything done in accordance with the Standard is exempted from Part IV of the Trade Practices Act 1974 (TPA), pursuant to section 51(1)(a) of the TPA. Section 18A of the Payment Systems (Regulation) Act 1998 (PSRA) allows a regulation to be made providing such an exemption.

An exemption from the requirements of the TPA in no way reduces the regulation and oversight of competition in the payments system. The EFTPOS and payments system will continue to be regulated by the RBA whose legislative mandate under the PSRA includes promoting competition in the market for payment services, consistent with the overall stability of the financial system.

 

These Regulations commence on the day after they are registered on the Federal Register of Legislative Instruments.