The Australian central bank has made history with potential global ramifications by establishing a standard rate at which interchange fees can be charged on transactions within its sphere of authority.
The Australian banking authority has set a standard charge of 0.50% of a credit card transaction to apply for the three years from the start of November 2006. This compares with the current average interchange fee in these schemes of a little under 0.55%.
The standard requires that MasterCard and Visa publish their interchange fees and that the weighted-average interchange fee in each scheme does not exceed the benchmark on November 1, 2006.
Meanwhile, regarding the standard in the Visa Debit Payment System, the Reserve Bank has calculated that the benchmark applying for the three years from the beginning of November 2006 is 12 Australian cents. For a Visa Debit transaction of average size, the introduction of this standard will result in a fall in the interchange fee from around 44 Australian cents to under 12 Australian cents.
Similarly, MasterCard has provided an undertaking to the Reserve Bank that interchange fees in the MasterCard Debit system will be below the same benchmark by November 1, 2006 and whenever any MasterCard Debit interchange fee is introduced, varied or removed.