Jun 9, 2006

The power to surcharge, without actually surcharging, still destroys bank revenues

Here is what the Reserve Bank of Australia had to say on the issue of credit card surcharges at a recent conference on antitrust activity in card-based payment systems:

"The power to surcharge does not have to be exercised to be a significant factor in negotiations over merchant service fees – merchants may threaten to surcharge and thereby obtain a lower merchant service fee. As such, the observed level of surcharging can not be considered an accurate indicator of the effect of the regulation."

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