Home topics news Reserve Bank of Australia. Source: RBA News News RBA warns banks over default routing, mulls debit card regulation Yajush Gupta May 29, 2023 The Reserve Bank of Australia (RBA) has strongly warned banks about affordable debit card transaction fees for merchants. Expressing concerns about limited choice in transaction routing, the RBA has indicated its intention to introduce regulations that would ban default routing on dual-network debit cards. In Australia, dual-network debit cards allow consumers to choose between various payment networks, such as eftpos, Visa, or MasterCard, when making transactions. However, these cards often come with default settings that favour one network over others, automatically routing contactless transactions through the default network unless merchants have enabled least-cost routing. The RBA argues that this default routing practice restricts competition and hampers the efficiency of the payment system. To address these concerns, the RBA is contemplating regulations that would prohibit card schemes and issuers from imposing default routing on dual-network debit cards. This proposed change aims to empower merchants by enabling them to select the preferred network for processing their debit transactions, fostering competition and potentially reducing transaction costs. Furthermore, the RBA has completed a review of an external report on a major system outage that occurred last October involving its virtual servers that disrupted 800,000 transactions worth almost a billion dollars. Regarding the pricing of New Payments Platform (NPP) services, the RBA intends to apply the same principles used for other payment systems when determining wholesale pricing for NPP