Co-regulation, responsive regulation and the reform of Australia's retail electronic payment systems
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This article critically analyses the process of reform to Australia’s retail payment systems and locates it within regulatory theory. It examines the introduction of standards for interchange fees, the development of access regimes for credit cards, the eftpos system and automatic teller machines, and the removal of certain restrictions on merchants imposed by card companies. The article argues that the regulators’ approach can be broadly situated within the principles of responsive regulation; however, the approach was not uniform and was influenced by the different regulatory styles of the Reserve Bank of Australia (RBA) and the Australian Competition and Consumer Commission (ACCC). It argues that the RBA’s insistence on pursuing voluntary agreement to reform within a co-regulatory framework resulted in reforms to eftpos and ATMs taking an unacceptably long time. The reasons for this failure are examined and it is argued they are related to two key structural factors — the networked nature of the payments industry, and the overlap of regulatory function between the RBA and the ACCC. Consequently the article argues there should be a re-examination of the roles of the RBA and the ACCC in payment systems regulation, and a re-thinking of the extent to which it is fruitful to persist with a voluntary self-regulation in this area. On a broader level, this suggests that clearer criteria are needed to guide regulators about when and how to engage responsive regulatory techniques. The development of a straightforward tool for regulators that draws together the disparate literature on regulatory choice is needed if Australia is to avoid the costly and time consuming approach to regulation that was evident from Australia’s experience of payment systems reform.