Reserve Bank’s review of Australia's payments system

The Reserve Bank of Australia has released a discussion paper ‘Reform of Australia’s Payments System: Issues for the 2007/08 Review’. The release of this paper begins the formal process of consultation for the Bank’s review of previous payments system reforms (including credit card reform in 2002) as foreshadowed in 2006.

The paper sets out details on the timing and scope of the review and provides a summary of the reforms and their rationale. The paper also raises a number of specific issues on which the Bank is seeking comment from interested parties.

The review will examine not only the effects of the reforms to date, but also how, looking forward, the regulatory regime can best contribute to competition and efficiency in the Australian payments system. In particular, the review will examine what has changed since the reforms were introduced and how any changes might bear on the appropriate regulatory regime in the future.

Reflecting the broad scope of the review, the paper raises three interrelated questions:

1. what have been the effects of the reforms to date?
2. what is the case for ongoing regulation of interchange fees, access arrangements and scheme rules, and what are the practical alternatives to the current regulatory approach? and
3. if the current regulatory approach is retained, what  changes, if any, should be made to the standards and access regimes?

Submissions are due by 31 August 2007. The Bank expects to release its preliminary conclusions from the review – including details of the general directions the Board is considering – for consultation in April 2008.