Document ID: chunk:federal_register_of_legislation:F2019N00027:body:0:p8
Version: federal_register_of_legislation:F2019N00027
Segment Type: other
Provision Reference: 
Character Range: 18794–21659

this, and the likelihood that an increase in incentives paid will lead to an increase in merchants' cost of accepting card payments (similar to an increase in interchange fees), an unduly wide definition of Issuer Payments is unlikely to be in the public interest.
Of note, the proposed definition of Issuer Payments specifies that only payments for core services can be included, rather than other forms of consideration such as rebates, refunds, allowances, discounts or deductions, as is the case in the current version of the standards. This change is to simplify and improve the clarity of the standard. The Bank expects that this modification is unlikely to have a material impact, given that the vast majority of, if not all, consideration for a scheme's core services are in the form of amounts payable. The Bank also proposes a modification to include associated entities of a scheme in the set of entities to which Issuer Payments can be made. This is primarily to align with the proposed definition of Issuer Receipts (see section 2.2.3), and is not expected to have a material effect on the calculation of Issuer Payments.

Proposal 2:
Clarify that 'Issuer Payments' are those payments made by issuers in relation to core services of a scheme.

     2.2.2             Issuer Payments to Acquirers
Currently, the standards refer to the possibility of Issuer Payments being able to be made to an Acquirer. The proposed draft standards would remove this reference. This element of the definition was intended to maintain a level playing field between four-party schemes and American Express companion card arrangements, where the role of American Express in companion card arrangements could have been interpreted as that of an acquirer. Under the proposed draft standards the definition of Issuer Payments includes payments to an associated entity of a scheme, and thus would encompass payments made to an associated entity that is an acquirer. Accordingly, the specific reference to Acquirers is no longer required.

Proposal 3:
Remove references to 'Acquirer' from the definition of 'Issuer Payments' in the standards.

     2.2.3             Issuer Receipts

Discounts and non-financial benefits
While the majority of incentives provided to issuers by schemes are in the nature of financial flows (payments, rebates, discounts and similar), there are some incentives provided that have more of a non-financial nature. Stakeholders have indicated that these can, for example, take the form of goods or services provided by schemes to issuers or credits for services that can be accessed at some point in the future. Therefore, stakeholders have sought clarification on whether these type of incentives are intended to be included in the definition of Issuer Receipts. In the Bank's view, the inclusion of the value of these types of incentives