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RBA keen to change Visa, MasterCard rules

RBA keen to change Visa, MasterCard rules

(30 May 2013 – Australia) The Reserve Bank of Australia (RBA) has announced a consultation paper proposing revoking the access regime to credit cards, allowing Visa and MasterCard to decide who they allow to issue and accept cards in their name.

Removing all restrictions would allow retailers such as Coles and Woolworths and big service companies such as Qantas and Telstra to issue cards in their own right, without partnering with a bank.

The Reserve Bank has asked for responses by 8 July.

The change comes after the RBA’s 2004 decision to strip Visa and MasterCard of the right to decide for themselves who could issue and receive their cards, saying the system had to be open to any "authorised deposit-taking institution" supervised by the Australian Prudential Regulation Authority (APRA) or to any member of a new class of ''specialised credit card institutions'' regulated by APRA.

This excluded the RBA itself from being able to issue or receive credit cards in the same way as other banks.

It is noted in the central bank’s consultation paper that Visa and MasterCard are not what they were a decade ago – owned by the banks and keen on restricting access to their infrastructure, now each is a public company, keen on business expansion.

The change would make it easier for non-banks to issue so-called ''pop-up cards'' that can be used just once, sometimes as part of promotions in the travel industry, sometimes so that employers can have greater control over their employees' expenses.

The bank also proposes a third course, which is to keep the access regime in place but to broaden it to include ''all entities conducting banking business in Australia'' - a definition that includes itself.

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