Study of Interchange Fees and Access in Debit and Credit Card Schemes
Australian Competition And Consumer Commission And The Reserve Bank Of Australia
The Payments System Board of the Reserve Bank and the Australian Competition and Consumer Commission will undertake a
joint study into interchange fees for debit and credit cards, and membership criteria for credit cards.
The objectives of the joint study are to:
obtain information on interchange fees paid by financial institutions; clarify the basis on which interchange fees are
currently set, looking particularly at the role of costs; assess whether current interchange fees are encouraging
efficient provision of debit and credit card services; and obtain information on current restrictions on credit card
The first phase of the study will involve the collection of relevant data on debit and credit card schemes from all
current participants. During the second phase, a discussion paper on interchange fees and credit card membership
criteria will be issued and interested parties will be invited to comment. Final conclusions will be made public.
The study is expected to take around 12 months to complete.
Debit and credit card transactions are an important and growing component of the Australian payments system, together
accounting for around 40 per cent of non-cash transactions. The efficient provision of these services is therefore
essential to the efficiency of the payments system. However, many of the details of debit and credit card arrangements
are not publicly available, making it difficult to judge whether the arrangements meet the needs of the community. In
particular, little is known about the interchange fees charged by financial institutions to each other when debit and
credit cards are used, or about the scope for new entrants to compete in some aspects of card business.
As background to the study, the Board and the ACCC note that:
in 1997, the ACCC asked the Australian Payments Clearing Association to require its members to implement "efficient
pricing principles" in setting fees for EFTPOS and ATM interchanges, as a condition of authorisation of its proposed
rules for the Consumer Electronic Clearing System. The ACCC was concerned that interchange fees could unreasonably
restrict access to ATM and EFTPOS networks. APCA has subsequently advised the ACCC that it does not have the capacity to
undertake self-regulation of interchange fees; some participants in ATM and EFTPOS arrangements have suggested that
interchange fees for EFTPOS, in particular, are anti-competitive, making it difficult for new and smaller players to
enter the business. Interchange fees for EFTPOS in Australia run in the opposite direction to those overseas; and
merchants have expressed concerns that restrictions on membership of credit card schemes place them in a worse
competitive position on the fees they bear than is the case for debit card transactions.
The study is in line with the recommendations of the Financial System Inquiry (Wallis Committee).
The ACCC is also conducting a separate investigation under the Trade Practices Act in relation to the setting of credit
card interchange fees.