Some quotes from today's testimony by Ian Macfarlane, Governor, Reserve Bank of Australia, responding to questions at a hearing of the Australian House of Representatives Standing Committee on Economics, Finance and Public Administration (PDF) regarding payment system reforms in Australia:
I think merchants as a whole have underestimated the power that they really have at their disposal. They are in this mindset because for 30 years they had all sorts of restrictions on them that prevented them from doing things that a normal business should be able to do; in other words, if you choose an expensive way of doing something, they should charge you more than if you choose a cheap way.
For 30 years they had legal restrictions that prevented them from doing that. So some of them have actually developed a very defeatist attitude, as you just described. What we are trying to do is put the power back in their hands to actually stand up to the providers of credit cards and charge cards.
Essentially, the merchants somehow or other have to get together and use some bargaining power. In a negotiation between, say, Amex and a merchant, everyone in Amex has spent every day of their lives becoming an expert and a specialist in payment systems. They negotiate with the merchant. The merchant knows how to buy and sell things and inventory control. He knows almost nothing about payments. It is an incredibly unequal bargain.