Banking Amendment (Credit Card) Regulation 2014 Exposure Draft

An exposure draft entitled the Banking Amendment (Credit Card) Regulation 2014 was released on the Australian Government’s Treasury website with submissions opening on the 14 October 2014. The draft regulation purports to amend the Banking Regulations 1966 (Cth) to open up credit card issuing and acquiring to non authorised-deposit-taking institutions (ADIs). The reforms will allow non-ADIs to become credit card issuers and card acquirers in the Visa and MasterCard credit card schemes.

Reserve Bank of Australia’s Payment Card Access Scheme

On 7 March of this year, the RBA decided in principle to vary the ‘access regimes’ for the Mastercard and Visa systems in Australia and to remove the prudential oversight framework. The RBA considered that the current restriction on the issuing of credit card (the requirement to be an ADI) prevents market access and restricted competition. The RBA considered it necessary to encourage greater market participation by widening the range of entities eligible to participate in the credit card systems. 

The RBA recommended reforms that would provide schemes with greater discretion to allow participation based on risk-based criteria.  Schemes would report to the RBA on how they had used this discretion and complied with access requirements. The intention is to decrease card payment costs, improve services, and improve innovations. 

Current Draft Regulation

The current exposure draft will open up access to the Mastercard and Visa card schemes by removing the restrictive requirement that issuers and acquirers be required to be ADIs. The Government has determined that existing banking regulation is more onerous than is necessary to manage the risk associated with card issuing and acquiring.

All new entrants will need to meet the same consumer credit regulations that currently apply to banks and SCCIs under the National Consumer Credit Protection Act 2009. The proposed credit card access reforms will not alter these general consumer credit protections.

The changes are scheduled to come into effect on the 1 January 2015. Meanwhile , submissions will be closed on the 28 October 2014. 

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.

 Banking Amendment (Credit Card) Regulation 2014 (Cth) as reproduced in TimeBase LawOne