According to the Australian central bank, domestic retailers are A$700 million a year better off since the authority imposed a cap on credit card interchange fees.
<p>The central bank's assistant governor Philip Lowe has contested that Australian retailers have made the significant annual savings due to his authority's decision to reduce the credit card payment processing fee to a maximum of 0.9% of a transaction for a MasterCard or Visa transaction in 2003. The average fee at that time was 1.4%.<br /><br />Based on the current levels of credit card spending, this represents a saving to merchants of around A$700 million a year, Bloomberg quoted Mr Lowe telling a parliamentary inquiry reviewing the bank's reforms.<br /><br />Mr Lowe added that the cap would was also benefiting the end consumers as the retailers would be passing at least some of their savings onto the customer. <br /><br />However, it is this last contention that has stimulated much disagreement, as some quarters argue that the benefits created by the reforms have not filtered through to the consumer. Not surprisingly, retailers back the central bank's position, but retail banks and consumer groups are lobbying for further change.<br /><br />As an interesting side note, international payment giant Visa has suggested that the payment industry reforms have contributed to a stagnation in Australia's development of payment technology such as chip and PIN, which Mr Lowe conceded was the case in certain areas.</p>