RBA Announces Review of Retail Payments Regulation

The Reserve Bank of Australia (RBA) is set to review the country’s retail payments regulation, focusing on efficiency, competition, and safety within the payments industry. This announcement was made by Ellis Connolly, head of payments policy at RBA, during the Merchant Risk Council Conference in Melbourne this week.

The review will begin after the Australian government completes its evaluation of the Payment Systems Regulation Act 1998 (PSRA), which defines the RBA’s regulatory scope. This initial phase aims to update definitions of payment systems and participants to include newer entities such as payment gateways, payment facilitators, digital wallet providers, and buy now, pay later (BNPL) services.

Following this, the RBA will conduct a comprehensive review of retail payments regulation, focusing on transparency and cost of payment services for consumers and merchants, surcharging frameworks, mobile wallets, and cross-border payments. Connolly highlighted that the RBA aims to address various card payment policy issues, including:

  • Costs for end users, such as scheme fees and international transaction costs
  • Implementation of least-cost routing for online debit card transactions to reduce merchant costs
  • Promotion of competitive payment services among e-commerce platforms
  • Introduction of tokenisation standards for online card payments

Regarding BNPL services, the RBA plans to revisit the no-surcharge rules that currently prevent retailers from passing operational costs onto consumers. In 2021, the RBA supported allowing merchants to surcharge BNPL services, citing that the benefits of no-surcharge rules were outweighed by the costs in terms of efficiency and competition. However, the RBA lacked the authority to enforce this change. Post-PSRA reforms, the RBA will reassess this issue within a broader review of its surcharging framework.

The RBA’s review seeks to modernise the regulatory environment, ensuring it remains effective and relevant amid evolving payment technologies and practices.

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