Low-cost debit card system for payments being considered


“Recognising the critical role of dual-network debit cards in facilitating least-cost routing, the government strongly encourages the board to consider mandating their issuance for major and medium-sized financial institutions,” Frydenberg (pic) said in the letter seen by Reuters.

SYDNEY: Australia’s treasurer has asked the central bank to consider forcing large and medium-sized banks and debit card issuers to provide multiple network options for merchants to route “tap-and-go” payments.

In a letter dated Aug 30 to the Reserve Bank of Australia (RBA), Josh Frydenberg threw the government’s weight behind “least-cost routing”, which would allow businesses to choose cheaper domestic systems instead of the prevalent but more expensive Visa Inc and Mastercard Inc networks.

“Recognising the critical role of dual-network debit cards in facilitating least-cost routing, the government strongly encourages the board to consider mandating their issuance for major and medium-sized financial institutions,” Frydenberg said in the letter seen by Reuters.

Business groups had been calling for the RBA, the main regulator of the country’s payments system, to mandate multi-network cards that processed payments via the lowest-cost networks.

RBARBA

“Least-cost routing means providing small business access to cheaper domestic debit payments schemes.

“This is rather than requiring transactions fees to only go through the far more expensive international providers,” National Retail Association CEO Dominique Lamb said in a statement.

The central bank declined to comment on the letter.

Visa and Mastercard did not immediately return requests for comment.

In May, the RBA said it expected Australia’s Big Four banks to continue issuing dual-network debit cards.

However, it said it did not see the need to mandate it or expect it from smaller banks.

It noted, however, that a growing number of small and medium-sized card issuers were choosing to use single-network debit cards.

It added that action should be taken to limit or slow that shift. ― Reuters

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