The Australian Debit Card Market: Default Settings and Tokenisation June 2023

The Bank has released an Issues Paper outlining options for further enhancing the competitiveness, efficiency and safety of Australia’s debit card market. The key issues are:

1. The practice of a default routing network being set at issuance on dual-network debit cards. This practice can reduce competition between card schemes and puts upward pressure on merchants’ debit card payment costs, which in turn feeds through into higher prices for consumers. The Bank seeks stakeholder views on the benefits and costs of actions to prohibit this practice, with merchants instead choosing the routing network.
2. The tokenisation of debit cards for the purpose of conducting online transactions. Tokenisation of card details in the online environment plays an important role in improving security. However, merchants and payment service providers continue to retain sensitive card details, which undermines the security benefits of tokenisation. There are also some areas where standardisation may be necessary to ensure that the full benefits of tokenisation are realised without impeding competition. The Bank seeks stakeholder views on expectations that the Bank could set for the industry to address these issues and to substantially reduce the amount of sensitive card details being held across the industry by the end of 2024.

Stakeholders are invited to provide written submissions in response to these issues. The closing date for submissions was 12 July 2023.