Five plot card issuing entry

At least five firms, several involved in travel services, are contemplating joining MasterCard and Visa in Australia. However, they are hoping the Payments System Board will relax the requirements of the access regimes adopted eight years ago and which the PSB now recognises may be a barrier to entry.

On Friday, the PSB outlined plans to relax the regimes' requirements in a manner that "would allow MasterCard and Visa to widen eligibility for membership."

The payments regulator said it had "become aware of at least five entities focused on new or niche business models that have indicated an interest in issuing or acquiring credit card transactions in Australia."

"Most have indicated that they consider the requirements to become a specialist credit card institution to be significantly more onerous than are warranted for the business they plan to pursue and out of line with arrangements in some overseas jurisdictions."

Among the five firms is IP Payments, a payments integrator that in mid-2012 received in-principle approval from the Australian Prudential Regulation Authority to establish an SCCI.

Another is Wrights Express, which, in mid-2013, told the PSB that it had also recently applied to APRA to set up an SCCI. Wrights said that it "planned to limit its activity… to issuing a niche commercial credit card product."

Others likely to be in the frame, judging from submissions to the PSB, as part of its review of the access regimes, are eNett and Lufthansa AirPlus - both in the travel niche - as well as PayVision, a UK-based payments processor.  

One more aspirant is the Reserve Bank of Australia itself, which, while in the business of banking for government agencies, does not meet its own definition of an authorised deposit taking entity eligible to join MasterCard or Visa.

Only two entities have gained SCCI status in Australia since the current access framework was implemented, and only one of those - Tyro Payments - was a genuinely new provider. The other, GE Money, merely undertook a compliance process for a long-running credit card issuing business.

The PSB said that "this modest take-up of the SCCI arrangements of itself suggests that membership of the schemes might not have been opened up as much by the 2004/05 reforms as had been hoped."

"While this might simply indicate that relatively few non-traditional parties have seen a business case for joining the schemes… [we are] aware of some parties that have considered pursuing the SCCI path but decided against it."

The PSB said that "the card schemes themselves have indicated that they would be prepared to admit a wider range of entities than currently hold ADI/SCCI status in Australia and a wider range than they would have been prepared to admit prior to the reforms."