By KEITH BRADSHER

SYDNEY, Australia - When Steve Franklin bought four plane tickets on Qantas last June, he faced an unexpected expense: a surcharge of 7.70 Australian dollars on each of the 136.70 dollar tickets - just for using his Visa credit card.

Mr. Franklin, who planned to fly his parents and his 7-year-old twin daughters from Sydney to Adelaide, knew that changes in the rules for credit cards had affected the cost of using them, but the extra 5.6 percent seemed excessive.

The charges were the consequence of changes in credit card rules in Australia that were aimed, in part, at reducing the cost of hidden fees. But the law, passed six years ago, also allowed merchants to assess new charges, and many have done just that, in some cases with fees that exceed the old ones.

Now, as the United States Congress debates how to rein in credit and debit card companies, Australia’s experience is being cited as an example of just how tricky that can be: for one thing, if regulators limit one fee or rate, banks are likely to find another way to keep revenue flowing.

As in Australia, the stakes are high in the United States and other countries. American merchants, like their Australian counterparts, complain that the high fees they must pay credit card companies and banks to accept their cards force them to increase prices on everything they sell - even for people who pay with cash - to make up the difference. In the United States, the Government Accountability Office issued a report in November showing that consumers who did not use credit cards “may be made worse off by paying higher prices for goods and services, as merchants pass on their increasing card acceptance costs to their customers.”

The main consumer federation in Australia, Choice, says that while regulations here have had a few unintended consequences, they have created incentives for retailers and consumers alike to rely more on debit cards, which have much lower processing costs, instead of credit cards. “It drives me crazy, people buying chewing gum on a credit card,” said Christopher Zinn, a spokesman for Choice. “We all pay for it.”

Though many people may not realize it, out of every dollar charged on a credit card, merchants in many countries get about 98 cents and sometimes less; the other 2 cents go to banks and credit card companies. Banks use these fees to cover fraud losses, their loss of interest on money until the consumer pays the bill, computer systems and employees who process credit card transactions. The banks also pay Visa and MasterCard for their marketing and digital networks.

Despite tighter rules,
banks find a way to
keep revenue flowing.

But the fees also generate tens of billions of dollars in revenue each year for banks that issue cards branded by Visa and MasterCard. In the United States alone, banks that issue credit cards get an estimated $40 billion to $50 billion in income annually from interchange fees, which are the biggest single component of fees charged to merchants. The banks and card companies are lobbying heavily against proposed changes. They warn that lower fees will lead them to squeeze credit and raise the cost of credit cards at a time when the economy thirsts for credit to sustain an economic recovery.

Some of this has already happened in Australia, where in 2003, after years of retailers’ complaints, the nation’s central bank required that the interchange fees that merchants pay banks that issue Visa and MasterCard cards be cut in half, to less than 1 cent.

That difference may sound tiny - what’s a penny? - but banks and card companies say the lower fees have cost them about 1 billion Australian dollars annually . And they have turned to consumers to make up the revenue.

Since the government policies went into effect, Australian banks have cut credit card perquisites and shrunk rewards programs, like frequent-flier miles. Banks now also require customers to pay their bills faster.

Perhaps more vexing, Australian merchants, including retailers, restaurants and airlines, are imposing surcharges for each credit card transaction, even though fees the merchants pay card companies have fallen.

Some companies have even figured out a way to make a profit. Accor, a global hotel giant with 11 brands ranging from the luxurious Sofitel chain to Motel 6, introduced a 1.5 percent fee here last February for credit card users.

“It has aided our profit margins,” said Michael Issenberg, Accor’s chairman of the Asia and Pacific region, who added that the hotel chain had seen little consumer resistance.


Steve Franklin, with daughters Imogen, left, and Sheridan, was assessed a 5.6 percent credit card surcharge. / DEAN SEWELL FOR THE NEW YORK TIMES