Reviewing the regulatory headwinds in other countries can be instrumental or instructional regarding what may become a focus in the U.S. With that in mind, The Sydney Morning Herald has an interesting article regarding some additional regulation that may be thrust upon the banks in Australia. Merchants there are seeing their interchange expense increase due to the rise in contactless transactions and the regulators may want to hold financial institutions accountable to bring that expense back down. The article explains:
The Reserve Bank is warning banks they risk facing further regulation if they fail to address retailers’ concerns over the mounting cost to merchants from tap-and-go payments made on debit cards.
As consumers embrace contactless payments, the retail industry estimates its costs from processing purchases made on debit cards have risen by hundreds of millions of dollars.
That is because when Visa or Mastercard debit cards are used to make a contactless payment, the transaction is automatically sent through the card scheme system run by the international giants.
Before tap-and-go payments took off, most of these debit card transactions would have instead been through the lower-cost eftpos network.
The U.S. has very little contactless activity, but the idea that interchange rates might be further regulated is always a top of mind with financial institutions and merchants.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
Read the full story here