The Australian Competition and Consumer Commission welcomes the Reserve Bank of Australia's decision to use its powers under the Payment Systems (Regulation) Act 1998 to 'designate' the credit card schemes in Australia, ACCC Chairman, Professor Allan Fels, said today.
"The Reserve Bank’s decision to designate the schemes will enable reform to be achieved more effectively. It can use its legislative powers to progress the reform to the credit card payment system in a manner which is likely to provide greater certainty. This means merchants and consumers will see the benefits of reform sooner".
Under the Payment Systems (Regulation) Act 1998, the Reserve Bank can 'designate' a payment system where it considers it to be in the public interest. The Reserve Bank can then impose an access regime and/or set standards, including arrangements for the setting of interchange fees. The Reserve Bank is required to hold public consultation before imposing an access regime or setting a standard.
“The Reserve Bank and the ACCC have worked closely to ensure that Australia has a competitive and efficient retail payments system that operates in the public interest.
"In light of the Reserve Bank's decision, the ACCC has resolved to discontinue the litigation against National Australia Bank in relation to the setting of credit card interchange fees", Professor Fels said. "The ACCC has agreed with NAB that the parties ask the Federal Court to discontinue the case.
"In October 2000, the agencies published a report on interchange fees and access in credit and debit card schemes which clearly identified the need for reform. It found, among other things, that issuing credit cards to consumers and providing merchants with the capacity to accept credit card payments generates revenues that are well above their average cost.
"The action taken by the agencies is in line with intense international scrutiny of the operation of credit card schemes.
"The Reserve Bank’s action should lead to a more competitive and efficient payment system in Australia to the benefit of business and consumers.
"In September 2000, the ACCC commenced proceedings against NAB in relation to credit card interchange fees. While the ACCC took action only against NAB, it alleged that the behaviour involved all the major banks and the credit card associations.
"The ACCC remains committed to the reform of the credit card schemes in Australia and will continue to work with the Reserve Bank in this area. Under the Memorandum of Understanding between the ACCC and the Reserve Bank, and consistent with the Explanatory Memorandum to the Payment Systems (Regulation) Act 1998, the ACCC will be consulted by the Reserve Bank about any action to reform the payments system".