Will the card industry's survival of tight interchange fee caps in Australia similarly doom the fee in the US and EU?

Implications: The Lafferty study indicates that forced reductions of bankcard interchange fees in Australia have not significantly harmed issuer or network profits.  This is the exact opposite of what industry representatives had predicted.  If Lafferty is on target, interchange pricing could be in for similar mandates in the US and EU.

Analysis: MasterCard, Visa and bankcard issuers have argued for several years that Australia's mandates to reduce interchange fees would deeply harm industry profits and card/credit distribution.  The Lafferty study says that did not happen -- that the industry has adjusted with little harm.  The fact that card usage has not declined suggests that consumers have taken the event in stride.  The Australian experience also suggests that similarly developed markets (e.g., the US and EU) can also take interechange reductions in stride.  Indeed, it is a certainty that merchants and their political anti-interchange allies around the world will use the study to force reductions on their home turfs.  The current political and judicial ill feeling against the industry in the US is so intense that the Australian story should be viewed as a major threat.