On Wednesday, Michele Bullock, the Assistant Governor of Australia’s central bank stated, the central bank is weighing its option of using its regulatory powers to slash the cost of electronic payments for merchants and consumers.
The development comes in the wake of consumers becoming wary of using cash in these times of the coronavirus pandemic.
The Reserve Bank of Australia (RBA) is in the process of conducting a review of retail payments regulation in the country with a focus on the cost and resilience of electronic payments and access to cash.
In April, ATM withdrawals were down by 30% from the previous month and was down by more than 40% from a year earlier with consumers switching to contactless payments.
This however has led to an increase in costs for some merchants when debit card payments are automatically routed through international schemes, said Bullock.
“So far, the bank has not mandated that acquirers explicitly offer least-cost routing to all their merchants but it remains an option that will be considered in the review,” said Bullock in a speech titled Panic, Pandemic and Payment Preferences.
RBA’s review looks at how transparency of the payment plans offered to merchants could be improved.
“Ultimately though, if market forces are not generating competition to lower the cost of debit card payments, we may need to consider lowering the benchmarks that serve as a cap on average interchange fees,” said Bullock.
She went on to add, the reduced use of cash was making industry considerations of consolidating ATM networks “more urgent.”
“I expect that there will be action on this issue more quickly now,” said Bullock.