The Government is taking action to increase competition in the credit card industry by expanding the number of companies that can issue cards or process card transactions for retailers.
Currently, only registered banks or specialist credit card institutions can issue credit cards or accept credit card transactions on behalf of retailers.
The Government’s changes will encourage new participants, driving product innovation and encourage better use of technology.
Increased competition will also benefit consumers and retailers by putting downward pressure on credit card fees and charges.
All new entrants will need to meet the same consumer credit regulations that currently apply to banks or specialist credit card institutions, such as obligations to ensure the responsible issuing of credit.
The new regime will include safeguards to ensure that any new entrants are financially sound institutions that do not add unacceptable risks to the financial system.
This change strikes the right balance between stability and competition and aligns with recommendations from the Reserve Bank of Australia’s review into Australia’s Card Access Regime in March 2014.
The Government will continue to work with the Reserve Bank of Australia and the Australian Prudential Regulation Authority to make the required changes to the regulatory framework.
The Government will also work with the Australian Payments Clearing Association to ensure that the rules governing other payments systems are adjusted to reflect the new regime.
These changes are expected to come into effect in early 2015.