SYDNEY – According to news reports from the Daily Telegraph, Australian officials are expecting that consumers and small retailers will save more than $550 million a year under a bold Reserve Bank of Australia (RBA) plan to place a cap on bank interchange fees for credit and debit card transactions.

RBA officials are working with regulators, major banks and the major card issuers, such as Visa and Mastercard, to suggest cap of 0.3% on interchange fees. The Daily Telegraph describes it as a “welcome clawback from the banks,” which would result in “a significant win for consumers who have long shouldered the burden of the excessive fees, while also aiding small businesses, which regularly absorb the charge, costing them up to 1% of a purchase.”

The 0.3% cap, first considered by the RBA in its review of bank fees in 2007, would also allow small retailers to compete on fairer terms with large retailers who have long received significant discounts on interchange fees from the major banks and card issuers because of their volume of transactions — often paying up to 10 times less than a small business.

The proposed plan, which is expected to draw fierce opposition from the banking industry, would bring Australia’s interchange fee into line with the European Union. Banks now charge an average 0.5% per transaction, significantly higher for premium Visa and Mastercard cards, where retailers have to absorb as much as 2.2% or pass the cost onto the consumers.

RBA Governor Glenn Stevens has talked of his desire to rein in interchange fees, primarily clipping the exorbitant charges attached to premium cards, the cost of which ends up on the books of small retailers. In his address at a banking and wealth summit in April, Stevens said that the capping of interchange fees was a “beneficial” policy, given that “the rates around the average have increased significantly over time.”