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Michele Bullock^[*]
Governor

Australian Payments Network Summit
Sydney – 12 December 2023

• Audio 37MB

Q&A Transcript Download 486KB
Next review of retail payments regulation

One of the key projects under our second strategic priority – advance and implement reforms – is a comprehensive review of our retail payments regulation. The RBA’s regulatory remit will soon be expanded, as part of the Government’s payments reforms. Specifically, the Payment Systems (Regulation) Act 1998 is being amended to ensure that newer players in the payments system – including ‘buy-now- pay-later’ providers, payment gateways, payment facilitators and mobile wallet providers – can be regulated by the RBA. We expect these reforms to be in place sometime in 2024, at which point we intend to launch a holistic review of retail payments regulation. This will be an opportunity to consult widely on current regulation as well as on areas where regulation might be required in the interests of safety, competition and efficiency. This will help us to set our regulatory priorities in the expanded regulatory perimeter.

The RBA’s payments regulation over the past couple of decades has been shaped by some key principles that help to promote safe, efficient and competitive markets. These include:

• The cost of payment services should be clear for businesses and consumers, because transparency helps to promote competition.
• Businesses should be free to choose which payment methods they accept.
• Businesses should be able to pass on the cost of the payment methods chosen by end users.

Some initial questions for the review are whether these principles are still sufficient and how to apply them to the wider range of payment systems and participants that will fall within the RBA’s expanded regulatory perimeter.

The review will also focus on some specific issues, including:

1. Buy-now-pay-later (BNPL) services – In previous reviews, we have concluded that merchants should have the right to surcharge BNPL services, which are expensive means of payment, just as they have the right to surcharge card payments. The right to surcharge for payment methods provides an important incentive for payment schemes to keep their fees low. Formal regulation may be required to allow this.

As part of the review, we look forward to engaging constructively with industry on these issues.

Maintaining access to cash

We also remain focused on access to cash for Australians. This issue has received some attention in the media recently and I would like to provide some context and discuss the work that is underway.

The use of cash for payments has been in decline for many years as consumers have switched to digital payments. The share of consumer payments made using cash declined from 70 per cent in 2007 to 13 per cent in 2022 (when our latest consumer payments survey was conducted) (Graph 1). Despite this decline, cash remains an important means of payment for some people and is widely held for precautionary or store-of-wealth purposes. Cash is also an important backup method of payment during system outages or natural disasters, when electronic payments might be unavailable.

For these reasons, the RBA places a high priority on the community continuing to have reasonable access to cash withdrawal and deposit services. The Government also highlighted the importance of maintaining adequate access to cash services as a key priority in its Strategic Plan for the Payments System.^[3]