23
Payments Regulation in Asia
The RBA expects issuers to promote LCR by enabling dual-network debit cards (DNDCs) and acquirers to provide access to LCR-enabled merchant accounts. The bank has set expectations for all payment facilitators and gateways to offer in-store contactless and online routing in 2023. It is worth noting that the RBA’s expectations are not regulations, although the RBA has stated that it will implement regulation if expectations are not met. In addition, it’s important to note that the RBA does not mandate issuers to offer DNDCs but has incentivized DNDC issuance by offering a higher cap for DNDC cards than single- network debit cards (SNDCs).
Channel In-Store In-Store In-Store
Debit Transaction Type
2021
2022
2023
2024
Inserted card
Contactless Card
Mobile Wallet
Ecommerce
Table 7 RBA LCR Expectations
In August 2022, the RBA introduced an additional policy measure pertaining to least-cost routing. Recognizing the continual growth in mobile wallet transactions and acknowledging the benefits for competition and efficiency in the payments system, the RBA now expects the industry to develop LCR functionality for mobile-wallet transactions. This decision follows recent indications that implementing least-cost routing for mobile-wallet transactions is more feasible and cost-effective than the RBA previously anticipated. After further consultation with the industry, the RBA, in November 2022, expressed the view that it is both feasible and desirable for the industry to deliver LCR functionality for mobile wallet transactions by the end of 2024. 40 While the prospects of implementing LCR in Australia are promising, there remains a considerable gap between expectations and the current state of availability and enablement by providers and merchants. In the RBA’s June 2024 review of LCR enablement and availability, only 70% of merchants had LCR enabled for card-present transactions. 41 Although LCR online was expected by end of 2022, the majority of providers in June 2023 had zero enablement and availability, and only half of providers in June 2024 had enabled online LCR for merchants. In August 2023, the RBA communicated expectations to providers to make faster progress on enabling LCR for merchants, noting that the bank will explore formal regulatory requirements to enable LCR if providers don’t make substantial progress by June 2024. In addition, the RBA reiterated its expectation that providers make LCR widely available for online transactions and noted that it expects faster progress on enabling LCR for merchants.
40
https://www.rba.gov.au/media-releases/2022/mr-22-39.html
41 https://www.rba.gov.au/payments-and-infrastructure/debit-cards/least-cost-routing/update-on-implementation. html
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