Runaway growth in scheme fees levied by Mastercard and Visa could be – but probably won’t be – corralled by intervention options canvassed by the Reserve Bank yesterday.
The Payments System Board of the RBA yesterday published its long-awaited consultation paper, a Review of Merchant Card Payment Costs and Surcharging.
This devotes two chapters to wholesale fees (including scheme fees) and then also scheme fees separately.
Scheme fees have risen over time, putting upward pressure on card payment costs for merchants, the PSB said.
They are also decidedly opaque, even in the eyes of large acquirers. The scheme fee hierarchy documents “are often complex and can be as long as 800 pages” the report notes.
On average, the PSB said, scheme fees account for around one-quarter of merchants’ domestic debit card transaction costs and around one-sixth of domestic credit card transaction costs.
For domestic transactions, scheme fees are higher for credit than for debit card transactions.
The RBA’s ‘preliminary assessment’ on the topic of scheme fees is that the PSB “proposes to set a regulatory expectation that scheme fees should not rise relative to transaction values without clear explanation.”
The weakest of all the options.
“The PSB’s preference is that card networks and market participants seek a satisfactory industry-led solution in the first instance” the RBA said. This is most unlikely to happen.
Some business groups, including the Independent Payments Forum, have called for the right to collectively bargain over scheme fees and, once again, on the side of the card schemes this is most unlikely to happen.
Should scheme fees continue to grow faster than transaction values, the PSB says it would “consider further potential measures to contain their growth including introducing a cap on scheme fees or mandating dual-network credit cards and extending least cost routing to credit card transactions.”