The Reserve Bank has overhauled its card payment interchange rules, tightening up on the fee benchmarks with the introduction of caps, increasing the frequency of benchmark reviews and extending coverage of the rules to prepaid cards and American Express companion cards.The bank has released a final set of standards, after a consultation process that started in March last year. The RBA has set benchmarks for credit card interchange (the fees that banks charge each other for handling card transactions) since 2003 and it extended interchange regulation to debit cards in 2006.For debit and prepaid cards, the weighted average interchange fee benchmark has been reduced from 12 cents to eight cents per transaction.The RBA said the average value of transactions in the MasterCard and Visa debit card systems had fallen by 43 per cent since 2008, which implied that average interchange fees had increased as a percentage of the transaction."A reduction in the weighted average benchmark may help drive greater acceptance of debit cards for low value transactions," the RBA said.For credit cards, the weighted average benchmark of 50 basis points for credit cards will be maintained.One of the RBA's concerns has been that card schemes have responded to the application of the benchmarks by expanding the range of categories of interchange fees. For credit cards the number has risen from three to 19 for MasterCard and from five to 23 for Visa since 2003. There has been a significant widening of the range of interchange rates. For MasterCard the range has gone from 66 basis points to 177 bps and for Visa from 48 bps to 180 bps.The RBA's concern is that this process has reduced transparency in the system. Last year's issues paper said: "Merchants are unable to see the cost of different cards and the cost of individual transactions, and this affects their ability to control their costs."Under the new rules, the card interchange benchmarks will be supplemented by caps on individual interchange rates: 80 bps for credit; and 15 cents, or 20 bps if the interchange is specified in percentage terms, for debit and prepaid.The RBA said: "These ceilings should result in a significant narrowing in the range of interchange fees faced by those merchants who do not benefit from preferred rates."Currently, the benchmark is reviewed every three years and the weighted average fee charged by each issuer must not exceed the benchmark.One of the RBA's concerns has been that, given this backward-looking compliance calculation, the weighted average fees have followed a sawtooth pattern, with fees drifting above the benchmark after each review and then dropping back at review periods.To prevent interchange fees moving in this way, compliance with the benchmark will be monitored quarterly rather than every three years.Commercial cards, which have the highest interchange fees, are included.Interchange-like payments to issuers in the American Express companion card system will be subject to equivalent regulation as applies to MasterCard and Visa credit card systems.The RBA said: "Issuer fees in American Express companion card arrangements play a very