Global credit card schemes yesterday refused to comment on the Productivity Commission's radical proposals to overhaul the payments market, including the plan to abolish interchange fees on credit card transactions.Banking Day sought responses from Visa and American Express to the proposed ban on interchange fees but each indicated they had nothing to say about the reforms that could have marked impacts on their Australian franchises.The commission spotlighted three party card schemes such as Amex in its final report mostly because of its concerns that banning interchange fees could deliver them competitive advantages over Mastercard and Visa."At this stage we won't be providing a response," an Amex spokesperson said. "If that changes I'll give you a call."However, one of Australia's leading payments consultants, Grant Halverson from McLean Roche, estimates that the interchange ban would remove almost A$2 billion worth of revenue currently being collected by the banks on Mastercard and Visa credit card transactions.The interchange fee is paid by acquiring banks to card issuers on credit card transactions.It is funded through the general merchant fee levied by acquirers, which means its abolition could potentially deliver big cost savings to retailers and other point of sale merchants.In theory this should mean that savings are also be passed on to consumers in the form of lower surcharging or cheaper product prices.But Halverson is not convinced that consumers will end up harvesting any savings."I'm concerned that we are about to see  a re-run of what happened in 2002 when the Reserve Bank forced the banks to reduce interchange fees and then allowed retailers to pocket most of the savings," he said."The Productivity Commission hasn't really explained how history will not be repeated."The commission concedes on page 485 of its final report that it might be relying on an RBA observation that it is "reasonable to assume" that lower merchant costs "mostly flow through to lower costs for consumers".Halverson is adamant that this did not occur after the interchange fees were slashed in 2002.He also highlights that card issuers after 2002 found it easy to make up for lost interchange revenue."For example, the average annual fee on credit cards in Australia rose from $24 to $94," he said."Such repricing measures ensured the banks recovered more revenue than they lost."The Productivity Commission has not addressed what's going to be done to ensure that doesn't happen again."If the government adopts the proposed ban on interchange fees, the Australian Competition and Consumer Commission would be charged with implementing the reform.While the ACCC has powers to check the pricing responses of merchants and banks to a resetting of interchange fees, in 2002 it elected not to exercise them.The proposed abolition of interchange is being supported by consumer advocates such as CHOICE, which have pointed to the "successful" introduction of zero interchange in New Zealand."Phasing out interchange fees does not necessarily create an opportunity for banks to gouge customers by excessively raising interest rates or fees," CHOICE told the PC inquiry earlier this year. "Some countries - such as New