Payment Systems (Regulation) Amendment (Interchange Fees) Regulations 2017

Administered by Department of the Treasury

Legislation au F2017L00453 Regulations Not in force Legislative Instrument

Legislation content

  EXPLANATORY STATEMENT

Issued by authority of the Treasurer

Payment Systems (Regulation) Act 1998

Payment Systems (Regulation) Amendment (Interchange Fees) Regulations 2017

Section 32 of the Payment Systems (Regulation) Act 1998 (the ‘Act’) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

The Payment Systems (Regulation) Amendment (Interchange Fees) Regulations 2017 (the ‘Amending Regulations’) amend the Payment Systems (Regulation) Regulations 2006. The amendment ensures that card system participants can comply with the new interchange fees standards determined by the Reserve Bank of Australia (RBA) when they come into force on 1 July 2017 without breaching the restrictive trade practices provisions in Part IV of the Competition and Consumer Act 2010 (CCA 2010).

Interchange fees are wholesale fees set by card schemes such as MasterCard, Visa and eftpos that require payments from the merchant's bank to the cardholder's bank on every transaction.  On 26 May 2016, as a result of a Review of Card Payments Regulation, the RBA issued two new standards regarding interchange fees:

•                 Standard No 1 of 2016: The Setting of Interchange Fees in the Designated Credit Card Schemes and Net Payments to Issuers; and

•                 Standard No 2 of 2016: The Setting of Interchange Fees in the Designated Debit and Prepaid Card Schemes and Net Payments to Issuers.

These new interchange fees standards will replace three existing interchange fees standards when they commence application on 1 July 2017. 

Section 18A of the Act authorises conduct in accordance with an ‘interchange fees standard’ for the purposes of restrictive trade practices provisions in Part IV of the CCA 2010.  Paragraph 18A(2)(b) of the Act provides that relevant interchange fees standards may be specified by regulations. The RBA’s existing interchange fees standards specified by the Payment Systems (Regulation) Regulations 2006 are currently the interchange fee standards for the purposes of paragraph 18A(2)(b).

If conduct in accordance with interchange fees standards was not exempted, the restrictive trade practices provisions could prevent issuers from setting and charging interchange fees in compliance with the interchange fees standards. The Amending Regulations ensure that this does not occur by removing the three existing standards from the Payment Systems (Regulation) Regulations 2006 and replacing them with the two new standards.

Details of the Amending Regulations are set out in the Attachment. 

The Act does not specify any conditions that need to be met before the power to make the Amending Regulations may be exercised.

Consultation on the final form of the Amending Regulations was considered unnecessary, given that they facilitate the implementation of matters that were previously consulted on. In March 2015, the RBA released an Issues Paper to commence the Review of Card Payments Regulation for a 7-week consultation period. The Issues Paper raised a number of issues relating to interchange fees regulation. In December 2015, the RBA released a Consultation Paper for the Review of Card Payments Regulation, including draft interchange fees standards, for a 2-month consultation period.

The RBA produced a Regulatory Impact Statement in relation to the new interchange fees standards which can be found on the RBA website at: www.rba.gov.au/payments-and-infrastructure/review-of-card-payments-regulation/pdf/regulation-impact-statement-review-of-card-payments-regulation-2016-05.pdf.

The Amending Regulations are a legislative instrument for the purposes of the Legislation Act 2003.

The Amending Regulations commence on 1 July 2017.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Payment Systems (Regulation) Amendment (Interchange Fees) Regulations 2017

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The Payment Systems (Regulation) Amendment (Interchange Fees) Regulations 2017 ensure that card system participants can comply with the new interchange fees standards determined by the Reserve Bank of Australia when they come into force on 1 July 2017 without breaching the restrictive trade practices provisions in Part IV of the Competition and Consumer Act 2010.

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms.

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

 

 

Attachment

Details of the Payment Systems (Regulation) Amendment (Interchange Fees) Regulations 2017

Section 1 – Name of Regulation

This section provides that the name of the Regulations are the Payment Systems (Regulation) Amendment (Interchange Fees) Regulations 2017.

Section 2 – Commencement

This section provides that the Regulations commence on 1 July 2017.

Section 3 – Authority

This section provides that the Regulations are made under the Payment Systems (Regulation) Act 1998.

Section 4 - Schedules

This section provides that the Schedule(s) amend or repeal the legislative instruments specified.

Schedule 1

Item 1 repeals the existing regulation 5 of the Payment Systems (Regulation) Regulations 2006 and substitutes a new regulation 5 that specifies the two new standards, being the:

•                 Standard No 1 of 2016: The Setting of Interchange Fees in the Designated Credit Card Schemes and Net Payments to Issuers; and

•                 Standard No 2 of 2016: The Setting of Interchange Fees in the Designated Debit and Prepaid Card Schemes and Net Payments to Issuers.

 

 

Overview

The Payment Systems (Regulation) Amendment (Interchange Fees) Regulations 2017 were enacted to ensure that card system participants could comply with the new interchange fees standards set by the Reserve Bank of Australia (RBA) when they came into force on 1 July 2017. This legislative instrument was introduced to amend the Payment Systems (Regulation) Regulations 2006, ensuring that the restrictive trade practices provisions in Part IV of the Competition and Consumer Act 2010 were not contravened. The Regulations were made under section 32 of the Payment Systems (Regulation) Act 1998 and were authorised by the Governor-General. The policy objective was to facilitate the implementation of the RBA's new interchange fees standards, which were designed to replace the existing standards in the Payment Systems (Regulation) Regulations 2006. The Regulations were introduced to ensure a smooth transition to the new standards without any breaches of the Competition and Consumer Act 2010. The Payment Systems (Regulation) Amendment (Interchange Fees) Regulations 2017 were developed following extensive consultation by the RBA, including the release of an Issues Paper in March 2015 and a Consultation Paper in December 2015, which incorporated draft interchange fees standards. The final form of the Regulations was not subject to further consultation, as they were considered to facilitate the implementation of matters that had already been subject to public consultation. These Regulations are a legislative instrument for the purposes of the Legislation Act 2003 and are compatible with human rights, as they do not engage any of the applicable rights or freedoms. The Regulations commenced on 1 July 2017, replacing the existing interchange fees standards with the new standards set by the RBA.

Scope and Application

The Payment Systems (Regulation) Amendment (Interchange Fees) Regulations 2017 apply to card system participants, including financial institutions and merchants, who are engaged in transactions involving the use of designated credit card, debit card, and prepaid card schemes. These regulations are made under the authority of the Payment Systems (Regulation) Act 1998 and are designed to ensure that participants can comply with the new interchange fees standards set by the Reserve Bank of Australia without breaching the restrictive trade practices provisions in Part IV of the Competition and Consumer Act 2010. The regulations have a national reach, impacting all card system participants operating within Australia. They come into effect on 1 July 2017, replacing the existing interchange fees standards with two new standards that were determined following a review of card payments regulation. The regulations do not specify any exclusions or thresholds but allow for the extension or restriction of their application through subordinate instruments as necessary.

Key Provisions

The Payment Systems (Regulation) Amendment (Interchange Fees) Regulations 2017, which are made under the Payment Systems (Regulation) Act 1998, aim to ensure that card system participants can comply with the new interchange fees standards set by the Reserve Bank of Australia (RBA) when they commence on 1 July 2017. Section 18A of the Act authorises conduct in accordance with an 'interchange fees standard' for the purposes of restrictive trade practices provisions in Part IV of the Competition and Consumer Act 2010 (CCA 2010). The Amending Regulations remove the three existing interchange fees standards specified by the Payment Systems (Regulation) Regulations 2006 and replace them with the two new standards issued by the RBA on 26 May 2016. This ensures that conduct in accordance with the new standards will not breach the restrictive trade practices provisions in the CCA 2010. The obligations imposed by the Amending Regulations on the parties and entities it governs are primarily centred around compliance with the new interchange fees standards. Card system participants must adhere to the provisions of Standard No 1 of 2016: The Setting of Interchange Fees in the Designated Credit Card Schemes and Net Payments to Issuers and Standard No 2 of 2016: The Setting of Interchange Fees in the Designated Debit and Prepaid Card Schemes and Net Payments to Issuers. These standards govern the setting of interchange fees by card schemes such as MasterCard, Visa, and eftpos and are crucial for maintaining the balance between competition and regulation in the card payment industry. Failure to comply with the Amending Regulations could potentially lead to breaches of the restrictive trade practices provisions in Part IV of the CCA 2010. While the Amending Regulations themselves do not explicitly outline specific offences, penalties, or consequences for non-compliance, breaching the restrictive trade practices provisions in the CCA 2010 can result in significant civil and criminal penalties. Civil penalties for corporations can include fines of up to AUD 10 million or three times the benefit obtained from the breach, whichever is greater. Individuals found guilty of breaching these provisions can face fines of up to AUD 1.1 million or imprisonment for up to five years, or both. In addition to these penalties, the Australian Competition and Consumer Commission can seek court orders to prevent future breaches and recover costs associated with enforcement actions.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.