The Retail Payment System Bill passed its third reading last week, and received royal assent on Friday 13 May 2022.
Who needs to read it? Why?
This is relevant to all parties involved in the retail payments system including banks, merchants, non-bank merchant acquirers and card schemes.
What does it cover?
The Act introduces a new regulatory regime for the retail payment system.
See also our previous note where we discuss the key features of the new regime, the implications for the industry, and our views.
To summarise, the regime operates by:
- Regulating “designated” retail payment networks (RPNs)
- Part 2 of the Act allows the Commerce Commission to recommend designations of RPNs. Those recommendations are made to the Minister, who may then recommend to the Governor-General that a designation order be made.
- Mastercard and Visa debit and credit networks are the initial designated networks. The initial pricing standards sets out interchange fee caps, and will apply to those networks. The initial pricing standards are set out under subpart 3 of Part 1 of Schedule 1 of the Act.
- Providing the Commerce Commission with broad regulatory, monitoring and enforcement powers
- In relation to a designated RPN, the Commerce Commission has broad powers to issue network standards and give directions about network rules.
- It may also issue merchant surcharging standards that could potentially apply to all merchants that accept payment services from RPNs, some or all RPNs, or any specified circumstances. This is to ensure that payment surcharges for payment services are no more than the cost to the merchant of the payment services used for accepting retail payments.
- More generally, the Commerce Commission has the ability to draw on its powers under the Commerce Act 1986 in carrying out its functions and exercising its powers under the Act.
Most of the Act comes into effect from the date of royal assent. This means that the Commerce Commission’s new powers come into effect immediately.
However, the initial pricing standard for the Visa and MasterCard networks come into force six months after the date of royal assent (mid November).
As previously discussed, it is important to note the new regime does not introduce a single, unified regime for regulation of payments services and providers. Other financial regulatory regimes will continue to be relevant.
If you have any questions in relation to retail payments systems or payments regulation more broadly, or are considering how these changes affect your business, please contact one of our experts.
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