Australia is an interesting study on the topic of interchange.  Its a relatively homogenous market, making it a reasonable study and control group.  The regulators sought to improve the position of consumers.

This paper (link courtesy of Payments News) looks at the interchange reforms in that country.

With the changes to the economics of both the credit card and the EFTPOS systems in Australia, some of the larger merchants are becoming self-acquirers. Coles Myer, for example, has links with all of the major Australian banks, American Express, Diners Club and agencies.  All payments through Coles terminals are ‘acquired’ by Coles and switched directly to the issuers, thereby largely dis-intermediating MasterCard and Visa.

These RBA reforms have given Australian retailers a ‘windfall’ via the reduction in credit card interchange rates but have also taken from them a useful income stream by reducing debit card interchange rates. On balance, however, retailers have come out ahead and now have the choice to surcharge any credit or charge card payments they take.

So in essence an attempt to benefit consumers by reducing the interchange rates, resulted in a shift of revenue within the to the Merchants.  There was also shifts in behaviours by the Card issuers, by partnering with some Merchants.

The most interesting one though is Coles Myer, which by acting as its own acquirer disintermediates the payments organisations as a self acquirer.  It strikes me that that approach is one that could work for others in the world with scale, e.g. Walmart, who already hinted at it, when I heard Jane Thompson at the Forrester conference in May.