MEDIA RELEASE No: 2006-08 Date: 29 September 2006 Embargo: For Immediate Release

INTERCHANGE FEES FOR THE MASTERCARD AND VISA SCHEMES

Credit card interchange benchmark

The Standard The Setting of Wholesale (‘Interchange’) Fees in the Designated Credit Card Schemes sets out the process for determining a common benchmark for interchange fees in the MasterCard and Visa credit card schemes. In accordance with the Standard, using data supplied by issuers of credit cards and the two schemes, the Reserve Bank has calculated that the common benchmark to apply for the three years from 1 November 2006 is 0.50 per cent. This compares with the current average interchange fee in these schemes of a little under 0.55 per cent.

The Standard requires that MasterCard and Visa publish their interchange fees and that the weighted-average interchange fee in each scheme does not exceed the benchmark on 1 November 2006 and whenever any interchange fee is introduced, varied or removed in that scheme.

Scheme debit card interchange benchmark

The Standard The Setting of Interchange Fees in the Visa Debit Payment System sets out the process for calculating an interchange fee benchmark for the Visa Debit system. In accordance with the Standard, the Reserve Bank has calculated that the benchmark applying for the three years from 1 November 2006 is 12 cents. This is a slightly lower figure than that published in the Regulation Impact Statement released in April 2006, reflecting the lower costs of processing and authorisation reported by members of the card schemes. For a Visa Debit transaction of average size, the introduction of this Standard will result in a fall in the interchange fee from around 44 cents to under 12 cents.

The Standard requires that Visa publish its debit card interchange fees and that the weighted-average fee does not exceed the benchmark on 1 November 2006 and whenever any Visa Debit interchange fee is introduced, varied or removed. Similarly, MasterCard has provided an undertaking to the Reserve Bank that interchange fees in the MasterCard Debit system will be below the same benchmark on 1 November and whenever any MasterCard Debit interchange fee is introduced, varied or removed.