Banking News

Regulators look to break Visa and Mastercard duopoly

Regulators look to break Visa and Mastercard duopoly

(6 February 2020 – Australia) Australian regulators are considering intervention to stop banks using Visa and Mastercard as their default debit card payment routes.

The move targets tap and go card payments made through the two global networks which according to a retailer association results in $203-230 million of additional costs per year.

Governor Philip Lowe was quoted in a Reuters report as advocating for retailers to be given cheaper alternatives such as local payment network EFTPOS (Electronic Funds Transfer at Point Of Sale) which would cost half as much as Visa or Mastercard. 

“We have made it very clear to the banking industry that we expect them to develop the functionality to allow the merchant to choose which payment rails it goes through, the international schemes or the EFTPOS schemes,” Mr Lowe said in Canberra after a speech. “If that process doesn't work, then we would have to consider a regulatory solution.”

Earlier this week, RBA’s head of payments policy Tony Richards also commented on the matter suggesting that legacy issues were the root of the problem.

“One of the possible reasons for the major banks dragging their feet on least-cost routing is that they each have very extensive relationships with the large international schemes – we will be exploring this in the review,” Mr Richards was quoted as saying in the Australian Financial Review.

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