A hot topic for years in Australian banking and payments, Interchange is again rearing its head – this time with the imprimatur of the Payments System Board in connection with the New Payments Platform. Following ongoing volume growth of the NPP and the addition of new services such as PayTo, Australian Payments Plus “has recently proposed significant changes to the NPP’s wholesale pricing arrangements,” the Payments System Board revealed in its 2023 annual report yesterday.??

The new pricing model involves switching from fixed pricing, where financial institutions are charged a fixed fee aimed at recovering NPP’s operating costs, to per-transaction pricing.  “The model includes an interchange-like fee for PayTo transactions, which would be paid by the institution initiating the payment (on behalf of the merchant) to the institution making the payment (on behalf of the customer),” the PSB said. The PSB said it recently considered the new pricing arrangements and “indicated that it would apply the same principles to the wholesale pricing of NPP transactions as it has applied to competing payment systems.  “In particular, interchange fees should not be set at a level that inhibits the competitiveness and efficiency of the payments system, and they should be published to provide transparency.”