Reserve Bank of Australia set to conduct “holistic review” of retail payments regulation

The Reserve Bank of Australia (RBA) is set to review the nation’s retail payments regulation, aiming to encourage the payments industry to address efficiency, competition, and safety issues independently.

Ellis Connolly, head of payments policy at the RBA, announced this review during his speech at the Merchant Risk Council Conference in Melbourne this week.

The review will commence after the Australian government completes its evaluation of the current Payment Systems Regulation Act 1998 (PSRA), which defines the RBA’s regulatory powers.

The initial phase will update the definitions of a payment system and participant to ensure newer players can be regulated if needed. It will also assess prominent systems and participants in online retail payments, such as payment gateways, 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 the transparency and cost of payment services for consumers and merchants, surcharging frameworks, mobile wallets, and cross-border payments, Connolly confirmed.

The central bank plans to address policy issues related to card payments, including the cost of card payments for end users, least-cost routing for online debit card transactions, competitive payment services among e-commerce platforms, and the introduction of tokenization standards for online card payments.

Regarding BNPL services, Connolly disclosed the RBA’s intention to revisit no-surcharge rules, potentially allowing retailers to pass operational costs on to BNPL consumers.

“In 2021, the RBA concluded that merchants should be allowed to surcharge BNPL services,” Connolly stated. “The RBA’s view was that the benefits of no-surcharge rules for supporting new market entrants were outweighed by the costs in terms of efficiency and competition in the payments system. However, it was unclear if the RBA had the authority to require the removal of these rules. After the PSRA reforms, the RBA plans to reexamine this issue as part of a broader review to determine if the surcharging framework remains fit for purpose.”

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Source: fintechfutures.com

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