"[That] goes to the very heart of this challenge and shows the unintended consequences of regulation in Australia," Mr Grobler told Fairfax Media. "The result is that the highest cost card for retailers and businesses to accept is able to incentivise consumers and benefit from the work of MasterCard and Visa, who along with our acquiring customers invested in the contactless infrastructure necessary for the unregulated proprietary Amex to grow." "There will not be true fairness for consumers, retailers and businesses while some payment schemes are regulated and others are not." Every time a customer uses Amex, merchants are typically charged about 1.7 per cent of the transaction. Visa and MasterCard's interchange fees are now capped at an average over three years of 0.5 per cent, and on average the total merchant service fee is 0.83 per cent. However, some premium MasterCard and Visa cards cost businesses up to 2.2 per cent to accept. In changes announced late last week, the RBA said it plans to cap the highest fee at 0.8 per cent while introducing quarterly averaging periods. A spokeswoman for American Express rejected Mr Grobler's comments, pointing out Amex had been an equal contributor to most industry technological upgrades, including the recent move to CHIP and PIN. "[Investment] is a network issue. Like contactless, in CHIP and PIN we were an equal [investment] partner," she said. "Apple Pay is available to every issuer in Australia, so all issuers have choice. Visa and MasterCard do not issue cards, the banks do. Where we act like a scheme, we [will be] regulated. "Issuers make their own choice about where they put their revenue and banks have some serious revenue that they could play with as well." Most industry watchers say Amex has been able to increase its market share from around 13 per cent to about 17 per cent in the last decade due to its introduction of bank issued Amex companion cards. The RBA estimates these now outnumber directly issued Amex cards. Mike Ebstein led the introduction of Qantas frequent flyer points to credit cards while he was at ANZ Bank in the 1990s and is now a bank consultant He, along with other experts, say Amex is in the process of supplementing the likely loss of its bank distribution channel via companion cards with Apple and other possibly other tech giants like Google. "Companion cards have given Amex and Diners Club an extra $86 billion a year of spending on purchases," he said. "They got a hand up. Apple Pay is a neat, simple facility and it will have appeal to consumers. "But the reality is that because Amex is not constrained to the same extent that the four party card schemes [Visa and MasterCard] are, gives them then ability to utilise the higher merchant service fee to give away margin, which the banks can't apparently do."
MasterCard has complained about a "regulatory hole", which it says has allowed American Express to be the first to roll out Apple Pay in Australia, while preventing MasterCard and Visa from doing the same. MasterCard argues that the way in which the Australian Central Bank regulates Amex means that it can force far higher costs onto retailers, businesses, and consumers. Every time a customer uses AMEX, merchants are typically charged about 1.7% of the transaction. Meanwhile, Visa and MasterCard's interchange fees are now capped at an average over three years of 0.5%, and on average the total merchant service fee is 0.83%.