Reserve Bank of Australia
Payment Systems (Regulation) Act 1998
Variation of Interchange Fee Standards
Explanatory Statement
Purpose and effect of variation of the interchange fee standards
Each of the three interchange fee Standards made by the Reserve Bank of Australia under Section 18 of the Act requires interchange fees to be set with reference to a benchmark, determined as follows:
- for the Standard for designated credit card schemes, the benchmark is calculated by the Reserve Bank from a survey of costs undertaken by nominated scheme participants;
- for the Standard for the Visa Debit system, the benchmark is calculated by the Reserve Bank from data collected under the interchange fee Standard for the designated credit card schemes; and,
- for the Standard for the EFTPOS system, the benchmark is calculated by the Reserve Bank from data provided by nominated EFTPOS acquirers.
In each case, the collection of cost data on which the benchmark is based was last undertaken in 2006. The Standards currently require updated cost studies to be undertaken every three years. A number of financial institutions have indicated to the Reserve Bank that the cost of compliance with these obligations is material. Given the possibility of a change to the regulatory environment in 2009, the industry will not be required to proceed with new cost studies at this time. The Reserve Bank is therefore varying the three interchange fee Standards to allow it to waive or suspend the obligation of participants to undertake cost studies and for the Reserve Bank to recalculate the respective benchmarks. Where the Reserve Bank decides to take this action, the benchmarks in existence at that time will continue to apply.
In order to ensure that the above changes do not affect existing obligations in relation to the level of interchange fees, the Reserve Bank is also varying the Standards for the designated credit card schemes and the Visa Debit system to clarify that the weighted average of interchange fees must still be below the benchmark on 1 November every third year, even if the benchmark is not recalculated.
The Reserve Bank considers that these variations are of a minor technical nature; they will reduce compliance costs but do not alter the fundamental purpose of the Standards.
8 December 2008