Variation to the MasterCard and Visa Access Regimes: Details-stage
Regulation Impact Statement – March 2014 3. The Objective of Reform

In line with the requirements of the Payment Systems (Regulation) Act 1998, the objective of reforming current access arrangements is to foster greater competition and efficiency in the payments system by achieving a balance that is in the public interest between new entry to the MasterCard and Visa systems and risk in those systems.

This objective might be achieved by:

  • providing greater scope for the entry of new participants in the MasterCard and Visa systems, including by entities that are not currently eligible because they are not ADIs
  • providing a suitable mechanism for the risk to the MasterCard and Visa systems from new entrants to be assessed and managed
  • ensuring that regulatory imposts on participants are not higher than warranted.

A subsidiary objective is to ensure that regulatory resources (including those of APRA) are directed to the greatest public benefit and not to functions more appropriately performed by the private sector.

A constraint on these objectives is that other regulations may also have to be altered to complement any changes to the Access Regimes. In particular, the Banking Act stipulates that only entities that are ADIs, the Reserve Bank or those with exemptions can carry on ‘banking business’ in Australia. Under the Banking Regulations 1966, banking business includes both credit card issuing and acquiring in a payment system designated under section 11 of the Payment Systems (Regulation) Act on 11 April 2001 (i.e. the MasterCard and Visa credit card systems).[1] Therefore, even if the Access Regimes were removed, any entity wishing to issue or acquire MasterCard or Visa credit cards in Australia would still be required to become an ADI unless the Banking Regulations were amended.

The Reserve Bank has authority only in relation to the Access Regimes and not the Banking Regulations. If the amendment of the Banking Regulations is required to achieve the preferred policy option, the Reserve Bank will work with APRA and the Treasury with the aim of achieving this.

Footnote

‘Designation’ is the first of a number of steps the Reserve Bank must take to exercise its powers over a payment system under the Payment Systems (Regulation) Act, and has no other effect. The MasterCard designation is available at <https://www.rba.gov.au/media-releases/2001/pdf/mr-01-09-gazette-mastercard.pdf>, and the Visa designation at <https://www.rba.gov.au/media-releases/2001/pdf/mr-01-09-gazette-visa.pdf>. The Bankcard scheme was also designated at the same time but the designation was revoked in April 2006 following the scheme's closure. [1]