Trust between merchants and Commonwealth Bank may have touched a new low last week after a bank spokesperson revealed the contents of a sensitive letter sent to a retail industry peak body by Australian Bankers Association chief executive Anna Bligh.In an emailed response to questions posed by Banking Day about merchant service fees, CBA quoted extracts from the correspondence sent to the Australian Retailers Association by Bligh on 1 November 2017.In the letter Bligh requests ARA chief executive Russell Zimmerman "clarify or correct" his claim that Australian banks rake in additional revenue of A$290 million by automatically routing contactless debit card transactions through networks owned by Visa and Mastercard.The letter was sent before the publication last week of new data by the Reserve Bank that shows average total merchant service fees on debit transactions routed through Visa and Mastercard were more than double those incurred through the eftpos payment system.The Reserve Bank found that, in the September quarter, average total merchant fees incurred by merchants using the eftpos network were only 0.26 per cent of transaction values, compared to 0.58 per cent for the Visa and Mastercard systems.Under current arrangements, CBA and other banks automatically route contactless debit payments through the expensive Visa and Mastercard networks. Modelling of the RBA data by independent payments industry consultancy, McLean Roche, has found that banks are actually harvesting almost double the $290 million estimated by the retail body.McLean Roche principal Grant Halverson said the banks were collecting up to $558 million in extra fees than would be the case if merchants could choose to route contactless transactions through the low fee eftpos system.Despite the growing body of evidence that banks are inflating the retailers' operating costs, CBA is holding the line that the fee mark-up is not great.Here's what CBA told Banking Day:"As the Australian Bankers Association note, in a letter to the Australian Retailers Association on 1 November 2017, the ARA's cost estimate of $290 million to merchants of dual network cards, defaulting through schemes, such as Visa and Mastercard, has 'been calculated from historical data before the RBA interchange fee reset of July 2017'," the bank stated in an email to Banking Day.CBA also quoted the following extract from Bligh's letter: " '…the Australian Retailers Association's estimate is an inaccurate representation of today's market and we would seek to have the record clarified or corrected.' "Zimmerman said he was appalled by the bank's decision to make public his organisation's private consultations with the ABA, but added that the new Reserve Bank data showed merchants were being slugged at least $400 million more in merchant fees on contactless transactions under the existing arrangements set by the banks."In a perverse way CBA is sort of right - our earlier estimate of the fee grab by the banks and the card schemes was extremely conservative," Zimmerman told Banking Day."Our preliminary analysis of the RBA data tells us that it exceeds $400 million.""I think CBA had no right to do what they've done."I'm appalled that