VISA and MasterCard argued in The Federal Court of Australia last week that it may take up to six weeks to present their case against the Reserve Bank of Australia over new credit card laws pertaining to merchant fees. The Court has set a trial date of May 5th but will hold related hearings on November 18 and April 18, according to The RAM Report ([www.ramreport.com]). The card associations argue that the Reserve Bank of Australia hasn’t complied with its obligations under the Payment Systems Act, and that the proposed changes don’t meet the public-interest test required under the act. In August, the Reserve Bank of Australia released its final reforms on credit card programs which include dropping average interchange fees by 40% and lifting the restriction imposed by credit card programs which prevent merchants from recovering from cardholders the costs of accepting credit cards. Under the new RBA rules, interchange fees will decrease from around 95 basis points to approximately 55-60 basis points by July 1, 2003. The Reserve Bank’s standard on merchant pricing will come into force on January 1, 2003. The RBA also announced an end to restrictions imposed by credit card networks which limit the entry of new competitors. Specialist credit card institutions authorized and supervised by the Australian Prudential Regulation Authority will now be eligible to apply to participate in credit card programs. All the reform measures will apply to the credit card networks operated in Australia by Bankcard, MasterCard and VISA, which were formally designated by the Reserve Bank as payment systems subject to its regulation under the Payment Systems (Regulation) Act 1998. American Express and Diners Club have each indicated to the Reserve Bank that they will remove their restrictions on merchant pricing.