Purpose and effect of the StandardPurpose and effect of the Standard

Purpose and effect of the Standard

The purpose of the Standard is to promote competition and efficiency in the Australian payments system by ensuring that interchange fees in the EFTPOS system can be set within similar regulatory constraints to the other debit card systems. The Standard requires that bilateral interchange fees and the weighted average of multilateral interchange fees in the EFTPOS system be subject to the same cap that applies to the Visa Debit system – currently 12 cent paid to the issuer.

The Standard is determined concurrently with the revocation of the previous Standard, The Setting of Interchange Fees in the EFTPOS System, as applied to the EFTPOS system designated in Designation No 2 of 2004. The practical effect is to remove the requirement under the previous Standard that bilateral interchange fees in the EFTPOS system be between 4 and 5 cents, paid to the acquirer, and to replace it with a requirement that bilateral fees not exceed the benchmark set for the Visa Debit system – currently 12 cents paid to the issuer. The weighted average of multilateral interchange fees in the EFTPOS system is also capped at the Visa Debit benchmark, as it was under the previous Standard. In addition, the Standard requires transparency of EFTPOS interchange fees and introduces a requirement for ePAL to certify annually to the Reserve Bank that it has complied with the Standard.

These changes are expected to promote competition between debit card systems in Australia and the development of a more efficient payments system.

Signed

Glenn Stevens

Governor

Reserve Bank of Australia

29 November 2012

Standard