MasterCard claims "regulatory hole" puts it at disadvantage in Australia
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%.

MasterCard says American Express's deal to be the first to roll out Apple Pay outside the US and Britain is evidence of the lack of regulation of Amex compared with Visa and MasterCard, whose fees are capped.

Eddie Grobler, the division president of MasterCard Australasia is happy the central bank wants to regulate Amex's so-called "companion" cards, capping their merchant fees at the same rate as MasterCard but said all payment fees should be regulated the same way, including Amex's directly issued cards.

MasterCard argues its bank partners have been hamstrung in negotiations over Apple Pay while Amex is free to share its uncapped fees

"Regulation of American Express companion cards is a small step in the right direction but it leaves enormous regulatory holes that mean retailers and businesses, and consumers will continue to see distorted costs for payments schemes, including American Express [proprietary], China Union Pay and PayPal," he said.

He said Apple Pay launching in Australia with Amex proprietary cards was a symptom of its ability to charge merchants much higher fees than Visa or MasterCard and therefore having much fatter margins to share with Apple, which has been demanding a cut of the fees paid to banks before allowing them onto Apple Pay.