Two of the recommendations by the Murray Report were directed at payment systems:
Clearer graduated payments regulation
The Inquiry noted that Australia has a complex, fragmented and less than clear framework for regulating payments, which is administered by ASIC, APRA and the Payment Systems Board (PSB). It proposed that the regulators should publish a clear guide to the framework for industry, in particular for new entrants, that outlines thresholds and regulatory requirements. Changes were also suggested to consumer protection regulation for retail payment service providers with a view to simplify and improve the regime.
The Inquiry also foreshadowed the problems with the current regulatory regime in not accommodating future innovation in payments, such as digital currencies. A review of current legislation was recommended as it was not clear that the PSB can regulate payment systems involving alternative mediums of exchange that are not national currencies. The digital currency community has welcomed the Inquiry’s recognition that new and more flexible thinking will need to be applied in the regulation of Bitcoin and other digital currencies.
It is also encouraging that the Inquiry did recognise that there were some inadequacies with the current system of regulation of the payments system. While some regulation is clearly warranted, it would have been pleasing to see some recognition of the possible benefits of stepping back from what some perceive as over-regulation in this area and whether, in some instances, there may be benefits in self-regulation.
Interchange fees and customer surcharging
A continuing issue (since regulations permitting surcharging were introduced in 2003) has been the “over-surcharging” by merchants (some of whom are alleged to be recovering more than their reasonable costs of accepting payment cards). The proposal by the Inquiry that the PSB consider ways to simplify compliance and improve the accuracy of surcharging is a good one. However, irrespective of the regulatory means that may be adopted as a result, the Inquiry did not have a solution for enforcing any such regulation. It is suspected that we may not see an end to over-surcharging by some merchants any time soon.
A major, and continuing, issue for the four-party credit card schemes in Australia was the introduction, in 2003, of restrictions on the amount of interchange fees that could be charged in credit card transactions. The recommendation by the Inquiry that the PSB consider reducing interchange fees in the short term, with a view to possible further lowering in the longer term, is likely to revive this issue.