"24. The Reserve Bank acknowledges that interchange fees can have a role in credit card schemes, as a means of enabling issuers to recover the costs of providing specific credit card payment services that are of benefit to merchants. The Reserve Bank’s draft standard provides an objective and transparent method for determining interchange fees. The credit card schemes and Australian banks have proposed a much wider range of costs for inclusion in interchange fees, but without convincing explanations of why these costs should be passed to merchants. Some of these other costs are proprietary matters between individual card issuers and their cardholders and are not intrinsic to credit card schemes, while the inclusion of costs such as credit losses would involve an element of double-counting since these costs are already being recovered in credit card interest rates.

25. The draft standard requires that credit card schemes publish their interchange fees and the aggregate costs that have been included. This will ensure that the calculation of interchange fees is entirely transparent and can be readily understood by card scheme members, the merchants to which the interchange fees are passed, and the community. Identifying the specific costs involved will also give card scheme members and merchants an incentive to address these costs."