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Payments Regulation in Asia
Case Study: Australia Co-badging Mandate and Routing
Due to its mandate to promote competition and efficiency in the Australian payment system, the Reserve Bank of Australia (RBA) has stated that it “strongly supports the issuance of dual-network cards to consumers and the provision of least-cost routing functionality to merchants” 35 This initiative has been estimated to result in approximately $800 million of benefit annually for merchants according to CMSPI. 36 Payments made through Australia’s domestic debit card network, eftpos, typically incur the lowest expenses for merchants, averaging around 0.3% of the transaction value, according to RBA data. This cost has remained relatively stable over the past decade. 37 In contrast, the average merchant fees for both Mastercard and Visa debit card transactions are higher at 0.5%, showing a flat trendline from the introduction of Least Cost Routing (LCR) expectations in 2019, while credit fees steadily climbed from 2019 onward (Figure 2). 38
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 American Express Credit Diners Club Credit eftpos Debit Mastercard and Visa All Mastercard Credit Mastercard Debit Visa Credit Visa Debit
Figure 2. Total Australian Merchant Fee as a % of Transaction Values Acquired 39
35
https://www.rba.gov.au/payments-and-infrastructure/debit-cards/least-cost-routing.html
36 https://cmspi.com/news/breaking-news-what-merchants-need-to-know-about-the-rbas-latest-payments- update/ 37 https://www.rba.gov.au/publications/bulletin/2022/sep/the-cost-of-card-payments-for-merchants.html 38 The RBA pushed for the issuance of co-badged cards prior to 2019. 39 https://www.rba.gov.au/payments-and-infrastructure/resources/payments-data.html.
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