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Payments Regulation in Asia
Co-badging and Routing
DEFINITION
Co-badging refers to a single payment card that has at least two or more payment card networks enabled on it, allowing the card to be used for transactions across multiple payment networks. This is especially relevant in countries where there exists at least one local network for processing. Local networks are typically networks that operate domestically or regionally, whereas global networks are typically offered across a variety of regions. Examples of local card networks include eftpos in Australia and RuPay in India, while a global network would be considered Visa or Mastercard. Merchants can take advantage of co-badging by routing transactions via competing networks. Co- badging and routing also offer merchants a strategic lever when establishing commercial deals with networks, providing the opportunity to reduce their payment costs and promote competition between card networks.
COUNTRY IMPLEMENTATION
Some countries, such as the United States, have mandated co-badging through central bank regulations, while regulators in Australia have established expectations or incentives for issuers to co-badge debit cards by setting higher interchange caps for co-badged cards. None of the other countries in scope have mandated or incentivized payment card co-badging. All countries in scope, however, operate at least one local debit network (Table 2).
Estimated Local Market Share
Country
Local Card Networks
Australia
Eftpos
20%
India
RuPay
14%
Japan
Suica, Aeon, J-Debit
4-10%
Singapore
NETS
17%
Table 2. Domestic Debit Networks by Country and Market Share 11
IMPACT ANALYSIS
In Australia, the market with the strongest public reporting of merchant fees, rates for the domestic debit network eftpos are on average less than Visa and Mastercard debit merchant fees. By Q4 2023, average eftpos merchant fees were 35 basis points, 15 basis points lower than Visa and Mastercard’s debit fees at that time. With unfettered access to domestic debit networks, CMSPI estimates approximately $800 million of benefit annually for merchants. 12
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Euromonitor 2022
12 https://cmspi.com/news/breaking-news-what-merchants-need-to-know-about-the-rbas-latest-payments-update/
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