Media Release Payments System Issues

Consultation on a Variation to the Standards Relating to Surcharging

In June, the Reserve Bank initiated a public consultation on potential changes to the Standards relating to merchant surcharging. In light of the views put forward during that consultation and recent developments in surcharging practices, the Board decided at its meeting on 18 November that there is a case for varying the Standards. The proposed variation will allow scheme rules to limit surcharges to a reasonable cost of acceptance, while still ensuring that merchants cannot be prevented from fully recovering their costs.

The need for this change arises because in recent years some surcharging practices that potentially compromise price signals, such as surcharging in excess of card acceptance costs, have become more widespread. The Board believes that the proposed variation will improve the efficiency of the payments system by providing better price signals to cardholders.

The Board wishes to note that the proposed variation is focussed on improving the efficiency of the payments system and may not necessarily address all surcharging practices that are viewed by the public as being of concern. The proposed variation does, however, provide the capacity for the schemes to ensure that surcharges reflect card acceptance costs.

A short paper outlines the proposal and sets out the drafts of the varied Standards.

Formal written submissions on the specific form of the proposed variations by no later than 10 February 2012 are welcome 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.

Waiver of Requirement to Recalculate Interchange Fee Benchmarks
in 2012

The Board has decided to waive the requirement for interchange fee benchmark recalculations in 2012.

The current interchange fee caps for the eftpos system, the MasterCard and Visa credit card systems, and the Visa Debit system are set with reference to benchmarks based on studies of banks' card-related costs. The respective interchange fee Standards require these benchmarks to be recalculated every three years, with the next recalculation due in 2012.

The Board is mindful of the fact that the cost of compiling data for benchmark calculations is material and does not believe that the benefit of conducting new cost studies and recalculating benchmarks will justify the cost in this case. The Board has, therefore, decided that the industry should not be required to proceed with the new cost studies. The Board's approval for a waiver of the 2009 benchmark recalculations means that the benchmarks calculated in 2006 – based on cost studies undertaken in the same year – continue to apply. A waiver for the 2012 benchmark recalculation will be published on the Bank's website.