ATMs Regulatory Framework


Reforms to the ATM system were introduced in 2009 through the combination of an Access Code implemented by the industry and an Access Regime imposed by the Reserve Bank under the Payment Systems (Regulation) Act 1998. These were aimed partly at increasing competition by making it easier for new entrants to become direct participants in the ATM system. They also sought to remove the opaque and inflexible interchange fee arrangements that applied when a cardholder made a transaction at an ATM not owned by their own financial institution. These were replaced by more transparent ‘direct charges’ levied by the ATM owner.

Among other things, the move to direct charging addressed the Bank's concern that the availability of ATMs might be reduced if the fees received by ATM owners could not reflect the cost of providing ATM services, particularly in more costly and lower-volume locations. It also meant that cardholders would be informed of the fee at the time they were making the transaction, and could cancel the transaction if they thought the fee was too high. This was in contrast to the previous arrangements where the cardholder's bank (which paid the interchange fee to the ATM owner) would pass on that cost (and often significantly more) to the cardholder, but provide notification only via the cardholder's regular bank statement.

Regulatory requirements

The key provisions of the Bank's Access Regime for the ATM System are a cap on the fee that an existing participant in the ATM system can charge a new entrant to establish a ‘direct connection’ and the elimination of interchange fees. However, the absence of interchange fees can make it difficult for smaller financial institutions to establish a competitively sized network of ATMs that are free of charge to their cardholders (equivalent to the large branded networks of the major banks). For this reason, the Access Regime allows the payment of interchange fees in limited circumstances – either to access a ‘sub-network’ of ATMs (a shared network of ATMs with a common and transparent interchange fee) or to access one other provider's ATM network.

The Access Regime also allows the Bank to grant exemptions from the interchange provisions where it is in the public interest. In 2012 the Bank granted an exemption for an arrangement among ATM industry participants to help reduce the high expenditure on ATM fees by residents of selected very remote Indigenous communities.

More information

For details of ATM regulations, including the designation of the system, the Access Regime, and Exemptions from Paragraphs 11 and/or 12 of the Access Regime see: ‘Regulations’. For information about consultations and regulatory decisions made in relation to the ATM system refer to ‘Consultations’ and ‘Regulatory Decisions’. Information on ATM access arrangements can also be found on the APCA website.