The watchdog complained that the reform proposals addressed only the setting of wholesale fees, without tackling the more pressing issue of liberalising access to the network.

ACCC chairman, Graeme Samuel, says: "The authorisation was presented as a means of reforming the eftpos system but omits addressing one key aspect necessary for eftpos reform that would be in the public interest, namely liberalisation of access to the eftpos network."

The ACCC considers reform of the network is necessary in order to encourage competition and enhanced efficiency in the Australian payments system and notes that a package of reforms addressing access, wholesale fees and merchant pricing has recently been implemented by the Reserve Bank of Australia in relation to credit cards.

Under the banks' current proposals, says Samuel, merchants are likely to face higher eftpos service fees, without making it easier for new groups to enter and compete against the existing participants.

"It may also act to further entrench the already high level of concentration in the eftpos network," he says, noting that the four major banks currently issue about 70% of debit cards and provide about 85% of merchant services.

In rejecting the proposals, the ACCC instead encourages the industry to commit to developing suitable access arrangements and establishing an appropriate implementation timetable as a way forward. It notes that the Reserve Bank has proposed a series of basic principles for access reform which may be achieved through the current Australian Payments Clearing Association review of the Consumer Electronic Clearing System.