RBA maintains watch over interchange
(27 August 2009 – Australia) Reserve Bank of Australia (RBA) has announced it will not be stepping back from regulating interchange fees, saying that insufficient progress has been made by the payments industry to contain interchange fees in the absence of regulation.
The decision was made after a meeting of the RBA’s Payments System Board, a division of the Bank which is responsible for its payment system policy.
RBA’s decision takes into account the recent industry efforts to revive EFTPOS as well as the early work on a new online payments system, known as the MAMBO project.
RBA believes that the current progress with these initiatives does not amount to substantial extra competition in interchange fees. In addition, the undertakings offered by the card schemes to contain interchange fee growth fell short of RBA’s expectations.
On the other hand, RBA has lauded industry commitment to free up competitive forces in the EFTPOS and online payment markets, agreeing to defer consideration of further interchange fee reductions. The regulator had previously proposed that the benchmark interchange rate should be dropped to 0.3 percent, down from 0.5 percent benchmark rate applied currently.
The statement from the RBA also provided a glimpse of its future regulatory agenda. The Bank said it had concerns about the competitive implications of different regulatory treatment of the EFTPOS and scheme debit markets, saying the matter would be discussed with the industry in the near future.
RBA’s decision takes into account the recent industry efforts to revive EFTPOS as well as the early work on a new online payments system, known as the MAMBO project.
RBA believes that the current progress with these initiatives does not amount to substantial extra competition in interchange fees. In addition, the undertakings offered by the card schemes to contain interchange fee growth fell short of RBA’s expectations.
On the other hand, RBA has lauded industry commitment to free up competitive forces in the EFTPOS and online payment markets, agreeing to defer consideration of further interchange fee reductions. The regulator had previously proposed that the benchmark interchange rate should be dropped to 0.3 percent, down from 0.5 percent benchmark rate applied currently.
The statement from the RBA also provided a glimpse of its future regulatory agenda. The Bank said it had concerns about the competitive implications of different regulatory treatment of the EFTPOS and scheme debit markets, saying the matter would be discussed with the industry in the near future.
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