incentives to use particular payment methods, and these developments in companion card usage suggest that the different regulatory treatments for the two arrangements may have been a factor in shaping the development of the market. in the bank ’ s view, an efficient payments system is promoted where the relative prices of different payment methods consistently reflect their relative resource costs. in reviewing this area, the bank has indicated that three options have been under consideration. those options are to retain the current arrangements, to remove regulation of the four - party schemes, and to regulate interchange - like payments for companion cards so that they would be subject to the same cap as the four - party schemes. in its consultation paper released in december last year, the bank indicated that it favoured the third of those options, and this has formed the basis for further consultation in the period since then. interchange fees the second main area under review relates to a range of issues around interchange standards. the interchange benchmarks set by the board are the primary instrument for the bank to anchor credit and debit card interchange fees at a desired level. the current benchmarks of 50 basis points for credit cards and 12 cents for debit have been in place since 2006. as i mentioned earlier, reductions in those benchmarks were considered, but not adopted, at the time of the 2007 / 08 review. in the period since then, the board has remained concerned that interchange benchmarks may still be higher in australia than is desirable for payments system efficiency. another concern has been the proliferation of interchange categories over time and the widening dispersion of interchange fees. often these work to the disadvantage of smaller merchants who do not benefit from preferential strategic rates. as at september last year, the average credit card interchange rate faced by non - preferred merchants was 55 basis points higher than the rate faced by preferred merchants ; for debit cards the difference was around 13 cents. at the individual merchant level, these differences can be much bigger. in its december consultation paper the bank set out a series of regulatory options in this area. they included retaining the status quo, reducing the weighted average benchmarks, and supplementing those benchmarks with hard caps on individual transactions. a fourth option of removing interchange regulations, while strengthening transparency of these fees to merchants, was also included. the board ’ s preliminary assessment was in favour of a mix of the second and third options i just described. this would involve retaining the existing weighted average of 50 basis points for credit cards, supplementing it with a hard cap of 80

the board launched its review with an issues paper in march 2015. in response to that, the bank received more than 40 written submissions from interested parties, conducted meetings with 28 parties ( some more than once ) and hosted a roundtable with participants from 33 organisations. these included card schemes, banks, other financial service providers, consumer groups and government agencies. the board ’ s preliminary assessment, taking all of that into account, was presented in a second consultation paper that was published in december, including a set of draft standards for further comment. the bank received over 40 substantive submissions in this second round and held more than 50 further stakeholder meetings, all of which will be considered in the board ’ s final assessment. as i said at the outset, i expect the board will decide on a final set of standards at its meeting next week, with an announcement to follow soon afterwards. all up, it will have taken a bit over two years from the time when the bank first signalled its intent to undertake this review until its completion. i sometimes hear comments to the effect that an even longer time should have been allowed for stakeholders to present their views, but the more common concern that i have heard has been from those who would prefer a faster process – consumers who would like to see faster action on excessive surcharging, or businesses who want greater regulatory certainty. i can only say in response that the bank is bound to follow due processes and takes its responsibility to consult very seriously. but for those keen to see the final result, there is not long to wait. once again, i thank all those who have taken part in the consultation process and i thank you for the opportunity to talk to you today. bis central bankers ’ speeches