The regulation of payment cards in Australia: Recent changes and their implications

Abstract

This paper describes why and how the regulator of the Australian payments systems, the Reserve Bank of Australia, has intervened in the economics of the plastic payment card and the effect that this has had on Australian participants in this value chain and their immediate responses. Following a brief review of the regulatory environment, the paper examines, first, the interventions in the credit card market and then the interventions in both the domestic EFTPOS debit card market and in the so-called 'scheme debit' cards issued with MasterCard or Visa acceptance marques. Finally, the paper considers why and how major Australian retailers have sought to become 'on-us' acquirers of their customers' card payments. Some conclusions are then offered as to what can be learnt from the Australian experience and why it is being observed so closely by others around the world.