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After a delay, the Reserve Bank of Australia plans to release a final review late this month on the outcome of its closely watched regulation of credit and debit card interchange. As governments around the world search for the best ways to determine interchange rates, Australia has become an important laboratory for calculating how interchange regulation benefits consumers and affects markets. In 2003, Australia capped interchange rates, causing average credit card interchange to decline from about 0.95% of each transaction to about 0.5%. For its review, Australia's central bank's Payments System Board is weighing feedback from Visa Inc., MasterCard Worldwide, American Express Co., merchants, consumer groups and payment organizations before assessing the success of interchange regulation and outline the board's next steps. The board said earlier this year it would release its final review in late August or early September, including its recommendations on whether Australia should leave established interchange regulations in place, cut rates to as low as 0.3% of each transaction or eliminate interchange caps altogether in favor of free-market competition. MasterCard and Visa wrote in comments responding to the board's preliminary report in April that government intervention into setting interchange rates has stifled innovation and competition among card systems. Many merchants say regulation has succeeded, and some advocate eliminating interchange. The board says it will release the final report and recommendations "in late September."
