APCA fires up over the RBA's payment regulation review

The Australian Payments Clearing Association has taken the Reserve Bank to task over the focus of its review of card payments regulation, saying it is narrow in scope and fails to recognise the changes occurring in the industry.

Earlier this year the Payments System Board of the RBA released an issues paper setting out the regulatory arrangements it felt needed attention.

These included interchange fee regulation, the need for more effective measures to limit excessive card payment surcharging and greater cost transparency for merchants.

The issues paper said the growing importance of cards as payment instruments meant it was important to get regulation right.

APCA is the payment industry's peak body and usually takes a measured approach in its public positions. Not this time.

Last week the RBA released submissions to the review of card payments regulation. APCA's submission said: "The focus of the issues paper is on modifying the current regime of interchange fee regulation to address particular concerns, rather than revisiting the underlying rationale in any holistic way.

"Critical to this premise is the explicit assumption that the market will continue to be largely composed of mature major card schemes that are viewed as a 'must take' method of payment for merchants.

"We believe that this characterisation significantly understates the degree of change in the competitive dynamics of the market place and that the rate of change, innovation and competition is in fact increasing.

"It is highly likely that the competitive dynamics of retail payments will be markedly different in three to five years time. Any changes made now to address specific concerns may have a short life expectancy.

"Industry-wide change driven by a new compliance regime is unlikely to meet any reasonable industry cost-benefit test."

APCA is guiding the development of the New Payments Platform, which will introduce data-rich, real-time payments into the Australian market. The NPP will provide core infrastructure, leaving the development of service overlays to the market.

APCA believes this "layered model" will create an environment for the development of innovative payment services. It is concerned that the RBA's narrow regulatory focus may stifle that innovation.