Australia's two largest credit card schemes, Visa and MasterCard, suffered a decisive courtroom loss on September 19, when a judge ruled the Reserve Bank of Australia's landmark credit card reforms were valid. The Federal Court judgement opens the way for the central bank to force banks to reduce so-called interchange fees by an estimated $400 million.
See also the press release of the RBA and their page on the reforms to credit card schems. Briefly, the reforms include a 40 per cent cut in interchange fees that banks charge each other for processing the transactions, estimated to be worth $1 billion a year. The changes will also allow retailers to charge customers extra for using a credit card and allow new non-bank players to enter the market.
Chris Connolly, of the Consumer Federation of Australia, said the ruling meant savings of up to $600 million in the first year of the reform.
"It's a big victory for consumers," he said. "There will be a domino effect across the banking system. We are hoping people will move from using . . . credit cards to cheaper options like Eftpos. That will save merchants and consumers a lot of money."
Well, speaking about landmark cases. This year the Wall-Mart settlement was already a blow to credit-card schemes. And now, they're being hit by the regulators as well. Credit-card schemes won't ever be the same no more.....
