Commonwealth Numbered Regulations - Explanatory Statements
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PAYMENT SYSTEMS (REGULATION) AMENDMENT (INTERCHANGE FEES) REGULATIONS 2017 (F2017L00453)
EXPLANATORY STATEMENT
Issued by authority of the Treasurer
Payment Systems (Regulation) Act 1998
Payment Systems (Regulation) Amendment (Interchange Fees) Regulations 2017
Section 32 of the Payment Systems (Regulation) Act 1998 (the 'Act') provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The Payment Systems (Regulation) Amendment (Interchange Fees) Regulations 2017 (the 'Amending Regulations') amend the Payment Systems (Regulation) Regulations 2006. The amendment ensures that card system participants can comply with the new interchange fees standards determined by the Reserve Bank of Australia (RBA) when they come into force on 1 July 2017 without breaching the restrictive trade practices provisions in Part IV of the Competition and Consumer Act 2010 (CCA 2010).
Interchange fees are wholesale fees set by card schemes such as MasterCard, Visa and eftpos that require payments from the merchant's bank to the cardholder's bank on every transaction. On 26 May 2016, as a result of a Review of Card Payments Regulation, the RBA issued two new standards regarding interchange fees:
• Standard No 1 of 2016: The Setting of Interchange Fees in the Designated Credit Card Schemes and Net Payments to Issuers; and
• Standard No 2 of 2016: The Setting of Interchange Fees in the Designated Debit and Prepaid Card Schemes and Net Payments to Issuers.
These new interchange fees standards will replace three existing interchange fees standards when they commence application on 1 July 2017.
Section 18A of the Act authorises conduct in accordance with an 'interchange fees standard' for the purposes of restrictive trade practices provisions in Part IV of the CCA 2010. Paragraph 18A(2)(b) of the Act provides that relevant interchange fees standards may be specified by regulations. The RBA's existing interchange fees standards specified by the Payment Systems (Regulation) Regulations 2006 are currently the interchange fee standards for the purposes of paragraph 18A(2)(b).
If conduct in accordance with interchange fees standards was not exempted, the restrictive trade practices provisions could prevent issuers from setting and charging interchange fees in compliance with the interchange fees standards. The Amending Regulations ensure that this does not occur by removing the three existing standards from the Payment Systems (Regulation) Regulations 2006 and replacing them with the two new standards.
Details of the Amending Regulations are set out in the Attachment.
The Act does not specify any conditions that need to be met before the power to make the Amending Regulations may be exercised.
Consultation on the final form of the Amending Regulations was considered unnecessary, given that they facilitate the implementation of matters that were previously consulted on. In March 2015, the RBA released an Issues Paper to commence the Review of Card Payments Regulation for a 7-week consultation period. The Issues Paper raised a number of issues relating to interchange fees regulation. In December 2015, the RBA released a Consultation Paper for the Review of Card Payments Regulation, including draft interchange fees standards, for a 2-month consultation period.
The RBA produced a Regulatory Impact Statement in relation to the new interchange fees standards which can be found on the RBA website at: www.rba.gov.au/payments-and-infrastructure/review-of-card-payments-regulation/pdf/regulation-impact-statement-review-of-card-payments-regulation-2016-05.pdf.
The Amending Regulations are a legislative instrument for the purposes of the Legislation Act 2003.
The Amending Regulations commence on 1 July 2017.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Payment Systems (Regulation) Amendment (Interchange Fees) Regulations 2017
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
The Payment Systems (Regulation) Amendment (Interchange Fees) Regulations 2017 ensure that card system participants can comply with the new interchange fees standards determined by the Reserve Bank of Australia when they come into force on 1 July 2017 without breaching the restrictive trade practices provisions in Part IV of the Competition and Consumer Act 2010.
Human rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.
Attachment
Details of the Payment Systems (Regulation) Amendment (Interchange Fees) Regulations 2017
Section 1 - Name of Regulation
This section provides that the name of the Regulations are the Payment Systems (Regulation) Amendment (Interchange Fees) Regulations 2017.
Section 2 - Commencement
This section provides that the Regulations commence on 1 July 2017.
Section 3 - Authority
This section provides that the Regulations are made under the Payment Systems (Regulation) Act 1998.
Section 4 - Schedules
This section provides that the Schedule(s) amend or repeal the legislative instruments specified.
Schedule 1
Item 1 repeals the existing regulation 5 of the Payment Systems (Regulation) Regulations 2006 and substitutes a new regulation 5 that specifies the two new standards, being the:
• Standard No 1 of 2016: The Setting of Interchange Fees in the Designated Credit Card Schemes and Net Payments to Issuers; and
• Standard No 2 of 2016: The Setting of Interchange Fees in the Designated Debit and Prepaid Card Schemes and Net Payments to Issuers.