Review of Payments System Reforms
Michele Bullock Head of Payments Policy Reserve Bank of Australia Overview
1. Scope of the review
2. What issues are being addressed?
3. Developments since the reforms?
4. Progress on the studies
5. Where to from here? Scope Credit cards
EFTPOS
Scheme debit
American Express/Diners Club
BPAY
ATMs The Issues Source: The Australian What are the Issues?
Effects of the reforms?
Alternatives to regulation?
Changes to current regulations? Developments
In the market?
Overseas?
Analysis? Non-cash Payments per Capita* Per year No No
60 60 Cheques Credit cards 50 50 Debit cards 40 40 Direct credits 30 30
20 20 Direct debits 10 10 BPAY 0 0 1994 19961998 2000 2002 2004 2006 *Debit and credit card data prior to 2002 have been adjusted for a break in the series due to an expansion in the coverage of the Retail Payments Statistics in 2002. Sources: ABS; APCA; BPAY; RBA Number of Card Payments Year-on-year growth %%
30 30 Credit
20 20
Debit 10 10
0 0 1997 1999 2001 2003 2005 2007 Source: RBA Market Shares of Card Schemes By value of purchases % Bankcard, MasterCard and Visa %
90 90
85 85
% American Express and Diners Club %
15 15
10 10
5 5 2002 2003 2004 2005 2006 2007
Source: RBA Merchants Surcharging Credit Cards* Per cent of surveyed merchants %%
12 12 Very large merchants Large merchants
8 8
Small merchants
4 4
Very small merchants 0 0 Jun 2005 Dec 2005 Jun 2006 Dec 2006 * Very large merchants are those with turnover greater than $340 million, large merchants $20 million to $340 million, small merchants $5 million to $20 million and very small merchants $1 million to $5 million. Source: East & Partners Pty Ltd Interchange Fees on a $100 Payment Exclusive of GST Merchant's bank Cardholder's bank
Credit cards
Scheme debit
EFTPOS Pre reform
Post reform
-0.6 -0.4 -0.2 0 0.2 0.4 0.6 0.8 $
Source: RBA Merchant Service Fees Per cent of transaction values acquired % % American Express 2.5 2.5
Diners Club 2.0 2.0
1.5 1.5
1.0 1.0 Bankcard, MasterCard and Visa 0.5 0.5
0.0 0.0 2003 2004 2005 2006 2007
Source: RBA Credit Card Rewards Programs Four major banks
Average spending required Benefit to cardholder as a for $100 voucher proportion of spending (bp) 2003 12 400 81
2004 14 400 69
2005 15 100 66
2006 16 000 63
2007 16 200 62 Sources: Banks websites, ANZ Telstra Rewards Visa Card, Commonwealth Bank MasterCard Awards card, National Australia Bank Visa Gold card, Westpac Altitude MasterCard. The Studies
Use of payment instruments
– Cash still important – Industry specific patterns Costs of payment instruments Where To Now?
Submissions 31 August Conference 29 November Draft conclusions April 2008
Standards/Access Regimes end 2008