Speakers: Michele Bullock

Transcript

Michele Bullock

Moving on now, another key responsibility for the RBA is the regulation and oversight of the payment system. So we've completed our review of surcharging and merchant payment costs. Following extensive consultation, the payment system board concluded that a package of reforms to remove card surcharging, reduce interchange fee caps, and improve transparency of payment costs would be in the public interest. Was removed from one October, and we have been monitoring the payments industry's implementation and working with industry stakeholders to support merchant awareness of the changes. So far, several large providers have reduced their card processing fees for small businesses. We're also seeing signs of increased competition with businesses shopping around and providers responding by offering more competitive pricing. These developments are welcome. Following amendments to the Payment Systems Regulation Act, which expanded our regulatory remit, we started a broader review of payment systems regulation with the publication of an issues paper in June. This review is considering how regulation should respond to rapid innovation and change in the payments landscape, including opportunities to improve competition efficiency and safety. In the submissions, stakeholders frequently raised issues relating to mobile wallets, third three-party card schemes, account to account payments and agentic commerce. We recently published the stakeholder submissions and a summary of them. We intend to release regulatory priorities by the end of 2026 and start further consultation on prioritised issues by mid-2027. In mid Mar in May, we published the Project Casha final report, which found that the tokenization of assets and money alongside upgrades to market infrastructure has the potential to enhance the efficiency and resilience of Australia's wholesale financial markets. Coordination challenges across the financial system have meant that these innovations have yet to scale. However, momentum around tokenised finance is now building in Australia along various lines, as it is internationally, and following the postacacia roadmap, we've continued to progress various initiatives to support responsible innovation. For example, we're currently consulting on how the RBA's own settlement services could support development and growth of tokenised asset markets and tokenised private money in Australia. Together with the government's financial innovation strategy, this work is drawing together the public and private sector, including the Digital Cooperative Research Centre, to ensure that Australia is well placed to harness the benefits of financial innovation in a manner consistent with monetary and financial stability. Now finally, I'd like to update the committee on recent developments in the cash distribution system. Cash remains a critical part of an inclusive and resilient payment system. The RBA remains committed to supporting the government's objective that cash remains available for as long as Australians want or need to use it. The cash distribution system has faced significant challenges and needs to continue to evolve to support ongoing access to cash across Australia. Industry participants have been working on a range of initiatives to promote a more sustainable and efficient system. These will require approval by the ACC. As the issue of Australian banknotes, the RBA also plays a key role in wholesale cash distribution. We provide banknotes to the major banks, which distribute these to the broader community. We're continuing to work with industry so that our distribution arrangements, programs, and incentives support efficient distribution and availability of cash across the country. The RBA welcomed the recent passage of the cash distribution framework 2026, which provides the RBA with crisis readiness and resolution powers to support continuity of critical cash distribution services. The H1C, as our co-regulator, will oversee pricing access arrangements and service level standards. The RBA recently designated Lynn Fox Armagard under the new legislation. This reflects its significant role in Australia's cash distribution system and makes it subject to the framework's obligations and requirements. Designation does not mean that the RBA will exercise crisis readiness or resolution powers in relation to Lynn Fox ArmadGuard. It just means that we will have the ability to act if we need to. So thank you for listening, and my colleagues and I look forward to answering your questions. Thank you.