HONG KONG — Australian credit union executives attending this year's World Credit Union Conference have largely validated Visa and MasterCard's position on card interchange in the U.S.
U.S. retailers have begun pressing federal legislators to cap the interchange that U.S. card issuers earn whenever one of their card holders swipe their cards.
A similar cap has been put in place in Australia in late 2003 and Australian credit unions executives at the conference report the interchange regulations have turned a product which had contributed to their credit unions' bottom lines has instead stopped paying for itself.
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"Yah, with the cost of fraud and other card costs the cards don't really pay for themselves anymore," explained Phylip Doughtry, CEO of MECU, the largest credit union in the state of Victoria, Australia. "We haven't done it on credit cards, but we are moving toward putting fees in place for using the cards." Doughtry said the CU has already put a fee schedule in place for use of debit cards at points of sale and ATMs.
He also confirmed Visa and MasterCard's allegation that Australian retailers, not consumers, have been pocketing the windfall from the interchange cut. Doughtry said that retailers will give a lower price for using cash if consumers ask for it but don't remind them that the lower price is available.
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