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Thirty Two Questions and Supporting Evidence Submission Letter to Royal Commission April-2018 Defined Terms & Documents 25th Question Will the Royal Commission recommend to the Governor of the Reserve Bank that it provide to the House of Representatives in the Commonwealth Parliament an annual written 'Statement on the Conduct of Monetary Policy' which includes, inter alia - A. an annual written 'Report on the Profitability of Credit Cards'; and B. certifies that Visa and MasterCard separately complied with the two weighted-average Interchange Fee benchmarks, including 'companion cards', during the relevant year, namely 0.50% for Credit Cards and 8 cents for Debit Cards?
================================================= Supporting Documented Evidence re 25th Question 1. Chapter 8 explains that U.S. Federal Reserve has provided an annual written report to the U.S. Congress on the Profitability of Credit Card Operations of "large U.S. Credit Card banks" for the last 26 years. "Section 8 of the U.S. Fair Credit and Charge Card Disclosure Act of 1988 directs the U.S. Federal Reserve Board to transmit annually to the U.S. Congress a written report about the profitability of credit card operations of depository institutions." In August 2016 the Board of Governors of the Federal Reserve System presented its 26th "Report to the Congress on the Profitability of Credit Card Operations of Depository Institutions" to the U.S. Congress. The Reserve Bank's webpage "Accountability" provides a section titled 'Accountability to Parliament' which notes that the Governor has provided to the Commonwealth Parliament a Statement on the Conduct of Monetary Policy every few years since 1996. 2. RBA's Review of Card Payments Regulation - Conclusions Paper - May 2016 - Section 3.4.9 Implementation timeline noted that - (i) the weighted-average benchmark for Visa/MasterCard Credit Cards - (A) of 0.50 per cent will be maintained; (B) will be supplemented by a ceiling (on individual interchange rates) of 0.80 per cent; (ii) to prevent Interchange Fees drifting upwards in the manner that they have previously, compliance with the benchmark will be observed quarterly rather than every three years. Visa or MasterCard will be required to reset its interchange schedule in the event that its average interchange fee over the previous four-quarter period exceeds the benchmark. (iv) the new interchange benchmarks would take effect from 1 July 2017. 3. The Governor of the Reserve Bank should exercise its "...extensive powers" under the Payment Systems (Regulation) Act 1998 and Reserve Bank Act (1959), Part II, Section 10 ''Functions of Reserve Bank Board" to" gather information from payment system participants and operators" by requesting each of the Four Pillars to provide (to the Reserve Bank) data of their combined Credit Card Products for the financial year ended 30 June 2018 which enables the Reserve Bank to present to the Australian Parliament by 30 June 2019 an annual written Statement on the Conduct of Monetary Policy which inter alia reports on the aggregate Profitability of Credit Card Operations of the Four Pillars that - (i) provides same style 'pie charts' for "Card Issuers' Revenue" [that quantifies at least seven revenue sources] and "Card Issuers' Costs" [that quantifies at least five costs, which include Rewards Programs] that is displayed in Chapter 8; (ii) informs the annual cost of Rewards Programme and the contribution to this annual cost from Interchange Fees; and (iii) certifies that Visa and MasterCard separately complied with the two weighted-average benchmarks set out in (i)(A) and (i)(B) above during the previous four quarterly reporting periods? 4. Below are extracts from Reserve Bank of Australia Bulletin - July 1998 - Australia’s New Financial Regulatory Framework that chronicles the Reserve Bank's powers, set out in the Payment Systems (Regulation) Act 1998, that allow the Reserve Bank to undertake more direct regulation of ‘designated’ payments systems to "... promote competition in the market for payments services, consistent with the overall stability of the financial system..." when it judges it to be "in the public interest" which may involve the imposition of access rules or operating standards for participants in such systems:
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