Payment Card Access Regimes: Conclusions – March 2014 Consultation and Changes to the Draft Access Regimes

The views expressed during consultation were generally similar to those expressed during the previous consultation and reported in the December 2013 consultation paper.^[1] The Bank received 14 submissions, 9 public and 5 that were confidential. In broad terms, most incumbent scheme members (including through industry associations) supported the status quo, though two favoured Option 2 but with a stronger Reserve Bank role than proposed. Potential entrants favoured Option 2. MasterCard favoured the removal of all access regulation, but noted the benefits of Option 2 relative to the status quo and that it would welcome additional, risk-appropriate participants to its system. Visa continued to be in favour of revoking the Access Regimes while retaining ‘some form of regulatory benchmark of approval’ that would encompass a wider set of entities than the SCCI regime.

The Bank received a number of comments on the detail of the draft Access Regimes. The card schemes argued that the Regimes' requirement for publication of eligibility criteria had the potential to interfere with competition between the schemes or could encourage ‘gaming’ by potential entrants. One of the schemes also argued that, given the range of potential participants, specifying criteria suitable for all possible scenarios would be difficult.

The Bank has considered these concerns, noting that the schemes already have an obligation to publish or make generally available assessment criteria under the current Access Regimes. It considers that the requirements of the draft Access Regimes are consistent with the publication of criteria at a level of detail that does not adversely affect competition or excessively constrain the schemes' discretion in determining eligibility or assessing risks. The Bank does not therefore see the need to further vary this element of the draft regimes.

One of the schemes submitted that the proposed requirement to publish the maximum time it will take to make a decision on any application to participate should instead cover the maximum time from receipt of the application until the time it communicates its proposed terms to the applicant; it would not include subsequent negotiation of terms. The Board has approved some changes to the draft Regimes to accommodate this concern, along with additional transparency requirements to make it apparent if the negotiation process is being used unnecessarily to delay entry.

Concerns were also expressed about the requirement to certify that participants admitted during the reporting period met all risk-related eligibility and assessment criteria, with this being interpreted as an ongoing obligation rather than applicable to the time of admission. The draft Access Regimes have been amended to make clear that the certification requirement relates specifically to the time of admission.

Revised draft Access Regimes that include amendments reflecting these comments are attached (Attachment 1).

Footnote

More detail can be found in Variation to the MasterCard and Visa Access Regimes: Details-stage Regulation Impact Statement, to be published on the Office of Best Practice Regulation's website. [1]