MEDIA RELEASE No: 2003-14 Date: 31 October 2003 Embargo: For Immediate Release

INTERCHANGE FEES FOR THE BANKCARD, MASTERCARD AND VISA CREDIT CARD SCHEMES

The Bankcard, MasterCard and Visa credit card schemes have today introduced lower interchange fees for credit card transactions in Australia. The new fees have been set having regard to the Reserve Bank's Standard on interchange fees that came into effect on 1 July 2003. Under the Standard, the weighted average of interchange fees must be no higher than a cost-based benchmark for each scheme, calculated from the costs of transaction processing, authorisation, fraud and fraud prevention and funding the interest free period.

The new interchange fees are a little over half their previous level, significantly reducing banks' costs of providing credit card services to merchants. The Reserve Bank is confident that competition will ensure that the new, lower fees will flow through to merchants and ultimately reflect in the prices that consumers pay.