Payment industry representatives have renewed their attack on the Reserve Bank's regulation of their business, saying it has resulted in a level of surcharging by some merchants that amounts to gouging.Visa Australia's country manager, Vipin Kalra, said there was evidence merchants were applying surcharges that exceeded the fees they paid for the processing of credit and debit transactions.Shopkeepers and other merchants have been allowed to apply a surcharge to card transactions since early this decade, when the Reserve Bank started regulating payment system pricing.Speaking at yesterday's Cards & Payments conference in Sydney, Kalra said: "There has been a A$6 billion reduction in interchange but we have not seen retail costs coming down. Merchants are passing costs back to consumers."Reserve Bank assistant governor Malcolm Edey said surcharging was something the Reserve Bank kept under review, but he conceded that the RBA did not have any power to regulate the level of merchant surcharges.Edey outlined the areas the Reserve Bank would focus on in its strategic review of payment innovation, which it kicked off last July. It plans to put out a detailed paper by mid-year and a final paper by the end of the year.Edey said: "There are proprietary innovations and system-wide innovations. The industry will do a good job with the first type of innovation. It is in relation to system-wide innovation that we see potential for inefficiency and lack of investment."The issues the RBA is interested in pursuing in its review include the transmission of data with payments, the timeliness of payments, the decline in cheques, mobile payments, electronic purses and security.Edey said: "Our (consumer) survey results suggest that concerns about fraud are impeding the take-up of online payments. This may also become an issue for mobile payments. A question for the strategic review is whether there is a need for increased co-ordination and co-operation on fraud issues."Kalra said the area of concern was card-not-present fraud, which is increasing at a rate of 24 per cent a year. He said Visa was working to encourage merchants to make use of higher level security, such a Verified by Visa, but take-up has been slow.He said regulation in this area would not be helpful.