FMI Statement on 2009 Australian Bank Ruling to Maintain Interchange Fee Reforms

ARLINGTON, VA — August 28, 2009 — The Food Marketing Institute (FMI) issued the following statement from Jennifer Hatcher, group vice president, government relations, regarding this week’s decision by the Reserve Bank of Australia (RBA) to maintain reforms governing the fees and rules associated with credit and debit card transactions.

"We applaud the decision by the Reserve Bank of Australia to preserve interchange or swipe fee reforms, which have increased transparency and competition and lowered the rates — now saving Australian retailers and consumers more than $1 billion a year.”

“Americans deserve this same relief, especially in today’s economy. Unchecked by competition or any government oversight, swipe fees cost nearly $50 billion a year, hidden from consumers, fixed by the credit card companies and banks and exceeding the combined total of annual fees, penalties and cash-advance fees.”

Background:

• Credit card companies and banks extract an interchange fee from every plastic transaction. In the U.S., the fees average about 2 percent, among the highest in the industrialized world.
• RBA reforms instituted from 2003–2006 brought the average fee down from 0.95 percent to 0.50 percent. Competition between the Visa and MasterCard networks has led to rates as low as 0.30 percent for credit card transactions and a flat fee of 3.6 cents for debit card payments.
• Virtually every developed economy in the world has ruled that interchange fees are fixed by banks and card companies in a manner that violates antitrust laws or are investigating these practices.