Transcript of Question & Answer Session Card Payments Regulation: From Wallis to Murray

If interchange fees are reduced will consumer credit card benefits be decreased?

Well all of those things are linked together. The typical pattern of flows is that interchange tends to serve the function of shifting the reward and cost balance between the merchant and the cardholder, so high interchange tends to promote an environment where you can earn greater rewards, but it also leads to increased costs on to merchants which are then going to be passed on in some form to consumers as well so there is a lot of churn going on there. But the general point being made is that the sort of competition we've been seeing has tended to work in the direction of increasing merchant costs which are bad for consumers.