Following a decision by the Payments System Board, the Reserve Bank has today designated the debit card scheme operated in Australia by Visa International as a payment system under the Payment Systems (Regulation) Act 1998. Designation is the first step in the possible establishment of standards and/or access regimes for a payments system.

The Visa debit card scheme has the following characteristics:

• the interchange fees charged between financial institutions for the processing of Visa debit transactions are the same as for Visa credit card transactions;
• Visa debit cards cannot be distinguished at the point of sale from Visa credit cards;
• the ‘honour all cards’ rule enforced by Visa requires that merchants accepting Visa credit cards must also accept Visa debit cards; and
• Visa debit cards are subject to a ‘no surcharge’ rule,

which may affect the efficiency of, and competition in, the payment system.

In the Bank's opinion designation is in the public interest. The Bank recognises the efforts that Visa and its members have made to propose changes that could address these issues. It hopes that productive consultations will continue under designation, a process which allows for greater transparency and comment from all interested parties.

The Bank will provide the opportunity for interested parties to make concrete proposals for reform before it releases in draft form any standards or access regime it considers may be necessary to address the public interest issues. As required by the Payment Systems (Regulation) Act, interested parties will have a further period for comment before any standards or access regimes are finalised.