"The Payments System Board’s responsibilities stem from the Financial System Inquiry (1997), Final Report, March. The Inquiry found that, while earlier deregulation had improved competition and efficiency in Australia’s payments system, further gains were possible. To that end, it recommended the establishment of the Payments System Board at the Reserve Bank with the responsibility and powers to promote greater competition, efficiency and stability in the payments system. The Government accepted those recommendations and established the Payments System Board in 1998. The Board’s responsibilities are set out in the Reserve Bank Act 1959. The Act requires the Board to determine the Bank’s payments system policy so as to best contribute to:
*     controlling risk in the financial system;
*     promoting the efficiency of the payments system; and
*     promoting competition in the market for payment services, consistent with the overall stability of the financial system.

At the time the Board was established, the Government also provided the Reserve Bank with specific powers to regulate payment systems in order to implement the Board’s policies. The most relevant powers in the context of the reforms to the debit card systems are those set out in the Payment Systems (Regulation) Act 1998.  Under this Act, the Bank has the power to designate payment systems and to set standards and access regimes in designated systems. The Act also sets out the matters that the Bank must take into account when using these powers, including the desirability of payment systems: being financially safe for use by participants, efficient and competitive; and not materially causing or contributing to increased risk to the financial system.

7.  Conclusion

The Board has decided that it is in the public interest to amend the EFTPOS interchange fee Standard such that any multilateral interchange fees set by EFTPOS Payments Australia Limited are subject to the same weighted-average cap as applies to the scheme debit systems. Bilateral interchange fees will continue to be regulated as they are now.

The new Standard differs from the draft Standard discussed in Section 4. It incorporates those elements of the draft Standard relating to the setting of multilateral interchange fees, while retaining the elements of the existing Standard that relate to the setting of bilateral interchange fees. A copy of the new Standard is attached. It will come into force on 1 January 2010."

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