Payment Systems (Regulation) Act 1998

Explanatory Statement - Revocation of the Access Regime for the EFTPOS System

Purpose and Effect

The Access Regime for the EFTPOS System (EFTPOS Access Regime) was originally imposed to address issues arising from the bilateral nature of the system and the resulting need for would-be participants to negotiate multiple bilateral connections with existing participants. The establishment of a governing body for the system and the development of a centralised network and clearing hub to replace bilateral connections has meant that the EFTPOS Access Regime is no longer required or relevant. The Payments System Board (the Board) of the Reserve Bank (the Bank) has therefore determined that the Access Regime should be revoked. This instrument implements that decision. The revocation will remove now-redundant obligations on system participants.

Consultation

In September 2011, the Board announced that it would undertake a review of the regulatory framework for the EFTPOS system, which at the time consisted of the EFTPOS Access Regime and a Standard relating to interchange fees. The need for the review arose because of industry developments in the EFTPOS system, most notably the establishment in 2009 of a new governing body – eftpos Payments Australia Limited (ePAL) – and ePAL’s subsequent decision to introduce a multilateral interchange fee schedule for the system in lieu of the previous bilaterally negotiated fees. Alongside these changes to the governance framework, the underlying architecture of the eftpos system had also undergone change; the industry, with encouragement by the Bank, had migrated to simpler connection arrangements, although other bilateral elements of the system remained. In June 2012, the Board released a consultation paper seeking submissions from interested parties on possible changes to the regulation of the EFTPOS system.

Taking into account the views of stakeholders, in November 2012 the Board made an in-principle decision to revoke the EFTPOS Access Regime, subject to satisfactory access arrangements being put in place by ePAL. The Access Regime contains ‘no-discrimination’ provisions relating to the bilateral negotiation of interchange fees and a cap on charges that can be levied on a new entrant for the establishment of a connection to an existing eftpos participant. The Board concluded that ‘no-discrimination’ provisions were no longer necessary given that new entrants could access the multilateral interchange fees set by ePAL. The Board indicated that it was prepared to remove the connection charge cap when it was satisfied that ePAL had suitable access arrangements in place. In August 2014, noting the establishment of a centralised hub by ePAL, the Board determined that the condition of ‘suitable access arrangements’ would be met when three of the four major banks had connected to the hub. This condition was met in August 2015 and accordingly the Board has determined that the EFTPOS Access Regime should be revoked.

Consultation Documents

Further information regarding the consultation process undertaken by the Bank may be found in the following documents:

RBA (2012), The Regulatory Framework for the EFTPOS System: Final Reforms and Regulation Impact Statement, November. Available at <http://www.rba.gov.au/payments-system/reforms/debit-card-systems/201211-reg-frmwrk-eftpos-sys/index.html>

RBA (2012), Review of the Regulatory Framework for the EFTPOS System: Consultation on Options for Reform, June. Available at <http://www.rba.gov.au/publications/consultations/201206-rev-reg-frmwrk-eftpos-sys/index.html>

RBA (2011) Payments System Issues, Media Release, Sydney, September. Available at <http://www.rba.gov.au/media-releases/2011/mr-11-18.html>

Reserve Bank of Australia
SYDNEY
27 August 2014