Regulation Impact Statement Updates

Official website for publishing regulatory impact analysis information for regulatory decisions announced by the Australian Government, COAG and COAG Councils.

Card Payments

Aust Gov
20th July 2016

Regulation Impact Statement – Reserve Bank of Australia

On 26 May 2016, the Reserve Bank of Australia’s Payments Systems Board announced several changes applying to regulation of debit and credit cards. The changes are intended to strengthen the operation of existing regulations that:

  • limit transactions fees that banks charge each other each time a debit or credit card is used (interchange fees); and
  • prohibit merchants from imposing excessive surcharges on consumers when using a debit or credit card.

The main change the Board made to interchange fees was to introduce caps on any individual interchange fee. No credit card interchange fee will be permitted to exceed 0.80 per cent and no debit card interchange fee will be able to exceed 15 cents if levied as a fixed amount or 0.20 per cent if levied as a percentage amount. Previously, interchange fees were only limited by weighted-average benchmarks.

The weighted-average benchmarks remain the primary element of interchange regulation. The weighted-average benchmark for debit cards will be lowered from 12 cents to 8 cents. The weighted-average benchmark for credit cards remains at 0.50 per cent.

As some of the highest interchange fees are applied to sales by smaller merchants the main beneficiaries of the Board’s changes are likely to be smaller merchants and their customers.

The other key change the Board made was to define permissible surcharges for credit and debit card purchases, which will better enable the Australian Competition and Consumer Commission (ACCC) to enforce rules prohibiting excessive surcharging.

A Regulation Impact Statement (RIS) was prepared and certified by the Reserve Bank of Australia and has been assessed as compliant by the Office of Best Practice Regulation (OBPR). The OBPR has assessed that the process followed by the Reserve Bank of Australia and the level of analysis contained in the RIS was consistent with best practice.

The RIS estimates the average annual regulatory cost at $5.8 million per annum. The OBPR has agreed to the regulatory cost estimates.

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