Visa calls for Financial System Inquiry to level the regulatory playing field and position Australia for the future


New research by Deloitte Access Economics shows significant economic impact from current legislation including $0.77 billion cost to merchants

Sydney - Visa today called upon the Financial System Inquiry (FSI) to level the regulatory playing field in the payments sector, end the regulation of interchange and to protect consumers from surcharging.

Stephen Karpin, Group Country Manager for Visa in Australia, New Zealand and South Pacific said “The FSI provides a unique opportunity to update payments regulation and position for the future.

“The electronic payments industry is at a unique moment in time where everyday advances in payments are opening the door to new ways to pay and be paid, but current regulations are out of step with today’s marketplace,” he said.

In its submission to the FSI, Visa is calling for:

Amendments to the Payments System (Regulation) Act (PSRA)
Visa is seeking amendments to the PSRA to level the playing field and capture existing, new and future entrants. Currently, it is at the discretion of the RBA to determine what payments systems are regulated under the PSRA and which are not, and as a result Visa and MasterCard face regulation other often higher priced competitors do not.

Mr. Karpin stated, “Payments regulation is not applied equally. A wider, clearer definition of what constitutes a payments system would capture existing, new and future entrants and ensure that the Act is grounded in fair competition for the marketplace and positioned for the future.”

An end to interchange regulation or equal application across the payments system
Visa is calling for an end to interchange regulation in Australia. Open and competitive market forces ensure that the benefits of electronic payments support everyone in the payments system, including merchants and consumers.

If Australia retains a cap on interchange, then it must be applied equally across the payments system. Research by Deloitte Access Economics , commissioned by Visa, shows the increasing share of unregulated payment systems, such as American Express, have cost merchants $125 million in higher fees in the 2013 financial year and a cumulative $0.77 billion since reforms were introduced.

According to Mr. Karpin, “The regulation of interchange and its effects on the payment system impacts the everyday lives of consumers and merchants and must be addressed by the FSI. The cost to the Australian economy is material.”

A JWS Research study , also commissioned by Visa, demonstrates it is clear consumers want to see change too and that they support a level playing field.

A ban on surcharging
Visa is looking to the FSI to support a ban on surcharging to protect consumers from unnecessary costs. Visa has been actively working with merchants and financial institutions to reduce excessive surcharging since the RBA introduced new guidelines in March 2013, limiting surcharging to the reasonable cost of acceptance.

According to Mr. Karpin, “It is clear the current system is not working. If we are going to see any real reduction in the level of surcharging, there needs to be clearer limitations on the reasonable cost of acceptance and enforcement by a public agency.”

It is Visa’s consistent view that excessive surcharging is an unfair cost on consumers. Consumers should not be penalised for choice at the checkout when they pay with a credit or debit card.

The JWS Research study shows people are angered by industries which apply surcharges – like hotels, airlines, and taxi services, which charge an inflated fee regardless of the type of payment card used. The same study shows there is strong support for appointing a government agency to enforce existing limits on surcharging.

“It is Australian consumers that stand to benefit from amendments to payments regulation. The current inequalities are driving up consumer bank fees, reducing cardholder benefits and resulting in a pass-through of costs to consumers,” said Mr. Karpin.


About Visa
Visa is a global payments technology company that connects consumers, businesses, financial institutions, and governments in more than 200 countries and territories to fast, secure and reliable electronic payments. We operate one of the world’s most advanced processing networks — VisaNet — that is capable of handling more than 47,000 transaction messages a second, with fraud protection for consumers and assured payment for merchants. Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa’s innovations, however, enable its financial institution customers to offer consumers more choices: pay now with debit, ahead of time with prepaid or later with credit products. For more information visit and @VisaNewsAU.

Media contact:
Teneille Rennick
0449 892 915
[email protected]