Treasurer released the long anticipated Productivity Commission Final Report
into Competition in the Financial System. This report, weighing in at an
impressive nearly 700 pages, builds on David Murray’s Financial System Inquiry
(FSI) and Wallis Inquiry.
The report goes into various elements of the system including whether there has been an appropriate balance between competition and stability in banking, which has entrenched the market dominance of the four major banks in Australia. The report strongly supports greater competition, transparency, better choices and empowering consumers across a broad range of initiatives, products and customer segments.
For the payments system, the PC observes that the system “is at a critical turning point” and recommends that:
• The regulator (Payments System Board) should ban interchange fees by the end of 2019. All other fees should be made transparent and published.
• The Competition regulator (ACCC) should investigate whether interchange fee regulation favours three-party card schemes, and if distortion exists, whether it is significant enough to require further regulatory intervention.
• Merchants should be given the capacity to select the default route that is to be used for payments by dual network cards.
• By the end of 2019, the ACCC should investigate what additional disclosure methods could be used to improve consumer understanding of fees for foreign transactions.
• There needs to be a review of the regulation of Purchased Payment Facilities (such as Paypal) and to simplify the regime.
• The Government should make the ePayments Code mandatory (which sets out basic rules for who pays for unauthorised transactions and establishes a regime for recovering unauthorised payments).
• That the New Payments Platform (NPP) be subject to an access regime to ensure that there continues to be competition for new entrants to join in; and
• Investigating ways for the NPP to promote competition, such as additional functionality for PayID to give customers the ability to send/receive bank transfers and other payments.
The Government will await the final report of the Royal Commission before they definitively respond to the PC (i.e. after February 2019).
While the Government’s response is some period away, PCN recommends that payments organisations should consider the business impact associated with the adoption of these recommendations, as well as integrating your public affairs advocacy to ensure the right business outcomes.
Author: Taleen Shamlian, Associate, Payments Consulting Network, Sydney
If you found this article helpful and would be interested in reading similar articles by our consulting team, please sign up to our email newsletter or download our most recent newsletter at https://www.merchantpricing.com/newsletter-archive.
Merchant Service Fees – Lean in and Learn Posted on: 19-10-2018
Did you know Merchants can negotiate their cost of Merchant Service Fees to improve their profit margins? This may be a very big surprise to the many thousands of merchants around Australia who have accepted the percentage buried somewhere in a contract.Read More
Industry Framework to Prevent Card-not-Present Fraud Posted on: 24-08-2018
The release of Australian Payments Network’s (AusPayNet) card fraud data for 2017 shows card-not-present (CNP) fraud accounted for 85% of all fraud on Australian cards.Read More
Australian Regulator ‘Unlikely’ To Embrace Interchange Fee Ban Posted on: 16-08-2018
The Reserve Bank of Australia (RBA) is said to be “hesitant” to lower interchange fees to zero, after the government received recommendations to ban the charge by the end of next year.Read More
Interchange Reform: Are We Falling Down a Rabbit Hole? Posted on: 08-08-2018
The Productivity Commission (PC) has released their final conclusions and there are a range of findings affecting the payments system in particular interchange reform. Are we falling down a rabbit hole?Read More
What is Interchange and Why Does it Matter? Posted on: 01-08-2018
Even if you have never heard the term ‘interchange’ this article is for you as we look at what it is, why it exists and whether it matters to merchants who accept scheme-branded (Visa, Mastercard and eftpos) payment cards either online, in-store or both.Read More
Payments Consulting Network Selected as One of Westpac’s 2018 Businesses of Tomorrow Posted on: 25-07-2018
Payments Consulting Network – which runs Merchant Pricing Hub – has been selected as one of Westpac’s 2018 Businesses of Tomorrow.Read More
6 Reasons to Use Multiple Payment Service Providers Posted on: 20-06-2018
Many merchants choose a single Payment Service Provider and then find themselves at a disadvantage if they can’t dynamically keep up with changing customer preferences. This is one of the many compelling reasons to work with more than one PSP.Read More
Tyro ‘Tap & Save’ Merchants Achieve Up to 20 Percent Savings Posted on: 12-06-2018
Tyro has achieved over 10 percent conversion of existing merchants and solid increase in new merchant sign ups since its launch of least cost routing in March 2018.Read More