Australia may impose a low-cost debit card payment scheme

The Treasurer of Australia has requested the Reserve Bank of Australia to consider requiring large and medium-sized banks and debit card issuers to offer retailers a multiple network option that would allow payments to be processed more cheaply. Businesses can use a multiple network alternative instead of the widely used but more expensive Visa Inc. (NYSE: V) and MasterCard Inc. (NYSE: MA) networks to choose cheaper domestic systems.

The Reserve Bank of Australia (RBA) stated in May that it expects Australia’s Big Four banks to continue offering dual-network debit cards, but that it does not believe it is necessary to mandate or expect smaller banks to do so. “Recognizing the critical role of dual-network debit cards in facilitating least-cost routing, the Government strongly encourages the Board to consider mandating their issuance for major and medium-sized financial institutions,” said Josh Frydenberg in a letter to the RBA.

The central bank did not respond to the letter. MasterCard expressed reservations about such a mandate. “There is a real risk that unequal comparisons will result in a ‘race to the bottom’ on pricing and consumers will bear the cost – both financially and when it comes to their data safety,” a MasterCard spokeswoman said.

. A Visa spokeswoman also stated that pricing was simply one of the criteria merchants examined when selecting a payment network. “Security, convenience, and the overall client experience” were among the others, she said. Business organizations have been urging the RBA, the country’s principal payments regulator, to require multi-network cards that may be configured to process payments via the lowest-cost networks by default.