Payment Systems (Regulation) Act 1998
Variation to Standards Relating to Merchant Surcharging
This notice is published in accordance with the requirements set out in Section 29(2)(a) of the Payment Systems (Regulation) Act 1998 (the Act). The variation is made under Section 18 of the Act, and commences on 28 November 2012.
The Reserve Bank of Australia varies the following standards, as described below:
- The Standard titled Standard No. 2, Merchant Pricing for Credit Card Purchases, originally gazetted on 27 August 2002 and incorporating amendments gazetted on 12 June 2012, as it applies to the designated credit card system operated in Australia known as the MasterCard system or the MasterCard network card system;
- The Standard titled Standard No. 2, Merchant Pricing for Credit Card Purchases, originally gazetted on 27 August 2002 and incorporating amendments gazetted on 12 June 2012, as it applies to the designated credit card system operated in Australia known as the VISA system or the VISA network card system; and
- The Standard titled The ‘Honour All Cards’ Rule in the Visa Debit and Visa Credit Card Systems and the ‘No Surcharge’ Rule in the Visa Debit System, originally gazetted on 7 July 2006 and incorporating amendments gazetted on 12 June 2012.
I. The Standard titled Standard No. 2, Merchant Pricing for Credit Card Purchases, originally gazetted on 27 August 2002 and incorporating amendments gazetted on 12 June 2012, as it applies to the designated credit card system operated in Australia known as the MasterCard system or the MasterCard network card system
paragraph 8
after
amended and restated
delete
1 January
insert
18 March
II. The Standard titled Standard No. 2, Merchant Pricing for Credit Card Purchases, originally gazetted on 27 August 2002 and incorporating amendments gazetted on 12 June 2012, as it applies to the designated credit card system operated in Australia known as the VISA system or the VISA network card system
paragraph 8
after
amended and restated
delete
1 January
insert
18 March
III. The Standard titled The ‘Honour All Cards’ Rule in the Visa Debit and Visa Credit Card Systems and the ‘No Surcharge’ Rule in the Visa Debit System, originally gazetted on 7 July 2006 and incorporating amendments gazetted on 12 June 2012
paragraph 8
after
amended and restated
delete
1 January
insert
18 March
Purpose and effect of the variation to the Standards
The purpose of this variation is to delay the date that the varied Standards, as amended by the variation gazetted on 12 June 2012 (‘the June variation’), for the designated credit card and Visa Debit systems will come into force. The delay will provide participants in the designated payment systems more time to consider the best way to implement the varied Standards. The Reserve Bank considers the current variation to be of a minor technical nature.
The variation has the effect of shifting the date on which the varied Standards will come into force from 1 January 2013 to 18 March 2013.
Additional discussion of the variation is contained in the Reserve Bank’s Media Release on 22 November 2012.
Signed
Glenn Stevens
Governor
Reserve Bank of Australia
22 November 2012
Overview
The Payment Systems (Regulation) Act 1998 was enacted by the Parliament of Australia to address the need for regulation of payment systems in Australia, ensuring consumer protection and maintaining the integrity and efficiency of these systems. The Act provides a framework for the regulation of designated payment systems, including the setting of standards by the Reserve Bank of Australia. This regulatory approach aims to foster competition and innovation while safeguarding the interests of consumers and participants in the payment systems. The policy objective underpinning the Act is to balance the need for regulation to ensure market stability and consumer protection with the need to encourage innovation and efficiency in the payment systems sector.
The Reserve Bank of Australia, as the relevant authority under the Act, has the power to vary the standards relating to merchant surcharging, as demonstrated in this gazette notice. This particular variation, published on 28 November 2012, delays the effective date of certain standards from 1 January 2013 to 18 March 2013. The variation was introduced to provide additional time for participants in the designated credit card and Visa Debit systems to implement the changes. The Reserve Bank considers this variation to be of a minor technical nature, intended to assist in the smooth transition to the new standards.
Scope and Application
The Payment Systems (Regulation) Act 1998 applies to the regulation of payment systems in Australia, including credit card systems operated by major entities such as MasterCard and VISA. The Act provides the Reserve Bank of Australia with the authority to vary standards related to merchant pricing and surcharges, ensuring fair and reasonable practices in the handling of credit card transactions. The variation to the Standards Relating to Merchant Surcharging extends to all merchants and payment service providers operating under the MasterCard and VISA systems in Australia. The Act's jurisdictional reach is national, as it is a Commonwealth Act. The variation made under Section 18 of the Act does not introduce any exclusions or exemptions but rather postpones the implementation date of certain standards to provide additional time for stakeholders to adapt. The Act may be extended or restricted through subordinate instruments as deemed necessary by the Reserve Bank of Australia.
Key Provisions
The main operative sections of the Payment Systems (Regulation) Act 1998 (the Act) are Sections 18 and 29. Section 18 provides the Reserve Bank of Australia with the authority to vary standards relating to merchant surcharging for credit card purchases in the designated payment systems, while Section 29(2)(a) mandates that these variations must be gazetted. This particular variation, which is detailed in the gazetted notice, pertains to Standards No. 2, Merchant Pricing for Credit Card Purchases, as they apply to the MasterCard and VISA systems, as well as the ‘Honour All Cards’ Rule and the ‘No Surcharge’ Rule in the Visa Debit System. These standards govern how merchants can charge customers for credit card purchases.
The obligations and requirements imposed by the Act on the parties governed by these standards include compliance with the specified dates for implementation. Specifically, the variation mandates that merchants must adjust their pricing practices in accordance with the delayed effective date of 18 March 2013, rather than the previously announced date of 1 January 2013. This delay allows for more time for stakeholders to prepare for the changes and implement the necessary adjustments to their payment systems.
The Act does not explicitly outline specific offences, penalties, or consequences for non-compliance with the varied standards. However, it is reasonable to infer that failure to comply with the Reserve Bank's directives could lead to enforcement actions or regulatory consequences. While the exact penalties are not detailed in the gazetted notice, it is likely that the Reserve Bank would take appropriate measures to ensure adherence to the new standards, which could include fines, sanctions, or other regulatory actions. Merchants and payment system operators must ensure they are fully compliant with the new effective date to avoid any potential repercussions.