Consultation on the Operation of the Bank’s Interchange Standards
The Reserve Bank today issued a consultation paper seeking stakeholder views on some
proposed
variations to determined by the Bank in 2016. Both standards relate to the setting
of
interchange fees in designated card schemes and net payments to issuers in those
schemes.
In 2015-16, the Bank conducted a review of its card payments regulation which concluded
with new
standards relating to interchange fees and merchant pricing in designated card schemes.
The
interchange standards introduced new requirements relating to the payment of ‘net
compensation’ to issuers. These requirements were designed to prevent the caps
placed
on interchange fees being circumvented by arrangements involving non-interchange
payments or
other incentives being provided by schemes to issuers.
Under the standards, schemes and issuers in designated schemes are required to certify to
the
Bank annually that they have complied with the net compensation provision. The initial
certifications were provided to the Bank in August 2018. This initial certification
process
indicated that the new standards were working as intended from a broad policy
perspective.
However, it also suggested that there were some issues with the interpretation of the
net
compensation provision that might benefit from some clarification, and areas where some
potential minor variations to the standards might be beneficial.
Accordingly, the Bank sought informal views from stakeholders on the operation of the net
compensation requirement. This included views on how the requirement could be modified
to
improve clarity, minimise compliance burden, or otherwise support the operation of the
standards, without changing their purpose or substantive effect. In November, the
Payments
System Board reviewed possible options to clarify the operation of the net compensation
provisions, and directed the Bank to draft variations to the standards for consultation
with
stakeholders.
This consultation paper describes the issues where stakeholders have sought clarification
and
guidance or suggested changes to the standards, and sets out the Bank’s proposed
options to address them. The consultation paper will mainly be of interest to issuers
and
schemes that are subject to the standards.
The Bank invites interested parties to provide their views in writing on the consultation
paper
and draft variations to the standards by 28 March 2019.
