2 PAYMENT METHOD PROFILES: CARD
Structure of Interchange Cap In Australia, as of July 2025, there is an interchange cap on individual debit and credit transactions. In addition, there is a separate, lower weighted-average cap for credit and debit transactions. As a result, there is variation in the size of the fee merchants will pay, with some transactions incurring fees lower than the weighted-average cap and other charged at the individual transaction cap. Regulated Issuer Coverage In the United States, debit interchange is regulated for issuers with over $10 billion in assets. According to Federal Reserve data, regulated issuers represent approximately two thirds of all debit spending and transactions. In other markets, like the European Union and Australia, the interchange caps apply to all issuers of cards in scope. Transactions in Scope Interchange caps can vary by transaction type. For example, in Australia, cards with two debit networks badged on a card will have a higher interchange cap than cards with only one debit network badged on the card. In New Zealand, credit and debit interchange caps vary by channel and contactless usage. Voluntary Commitments v. Interchange Caps In some markets, such as Canada, where voluntary commitments have resulted in a weighted-average cap of 1.4% and the European Union, where inter- and intra-regional rates are capped by voluntary commitments, card networks have worked with regulators to establish voluntarily set interchange caps for certain transactions. These caps function similar to regulator-set interchange caps in that they limit the size of interchange per transaction, but may have a set time limit and may lack a regulatory review process. The voluntary caps observed in Canada, for example, are significantly higher than the regulated interchange caps introduced by central authorities in European Union and Australia, where, as of publication, caps on credit are 0.30% and 0.50%, respectively. Routing Many markets have multiple networks badged on a single card for transaction routing, but only in two markets are issuers incentivized or required to badge debit cards with at least two unaffiliated debit networks: Australia and the United States, respectively. While State of the Industry Report 2024 considers the variations in least-cost routing (LCR) regulations, this section is meant to highlight the cost considerations associated with accepting card payments. Routing Mandate Since 2017, the Reserve Bank of Australia has strongly encouraged availability of LCR, through setting higher interchange caps for dual-network badged cards, setting expectations for acquirers to support LCR, and setting expectations that the industry make LCR available for mobile wallet transactions by the end of 2024. While these developments have contributed to increased access to LCR, dual-network card penetration rate sits at just 85%. 177 In contrast to Australia, the United States has mandated all issuers to enable two unaffiliated networks on nearly all debit cards in the U.S. 178
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