Australian regulation was a mistake. When the Australian government mandated reductions in merchant fees at the request of retailers, it resulted in unintended consequences:

• Retailers pocketed the reductions and prices didn’t come down
• The new economics forced:
  • reduced card program benefits
  • higher cardholder fees and interest rates
  • new entrants and niche players out of the market, resulting in reduced competition
  • slower adoption of new technology
• The highest priced acceptance proposition—Amex—which was not affected by the regulation, saw an increase in share, ultimately costing merchants more.

For these reasons, the U.S. Department of Justice has recommended against a similar proposal in the United States and noted that the Australian approach hurt consumers.

The U.S. Government Accountability Office’s review of the Australian model found that it caused increased cost and decline in value for consumers, and no evidence of reduction in retail prices.

Read how regulation of interchange in Australia hurt consumers.

Read how the U.S. Department of Justice, the Federal Trade Commission and the Government Accountability Office have all strongly argued against interchange regulation in the United States.