A report commissioned by Visa claimed that the rising market share of unregulated three-party card schemes, such as those operated by American Express and Diners Club, cost merchants A$125 million in higher fees in 2013 - and a total of $770 million in higher fees since 2003 when card interchange regulation was introduced.This claim is made in a report by Deloitte Access Economics for inclusion in Visa's second round submission to the Financial System Inquiry."Inconsistent treatment of like products may result in an unlevel playing field," Visa said in its submission.The big card schemes operators Visa and MasterCard didn't get many positive takeaways from the interim report of the Financial System Inquiry. The FSI said that regulation of credit card and debit card payment schemes was required for competition to lead to more efficient outcomes, which is counter to the schemes' position.The Inquiry said that, on balance, interchange fee caps had improved the functioning of four-party payments schemes, such as those operated by Visa and MasterCard.And on the issue of surcharging, which the card schemes want banned, the interim report said: "Allowing merchants to surcharge customers for the reasonable cost of [card] acceptance improves efficiency by providing cardholders with clear price signals about the costs of different payment mechanisms."It said the "no surcharge" rule, which is the schemes' preferred option, could reduce efficiency.All was not lost, however. The report said that differences in the structure of payment systems had resulted in systems that perform similar functions being regulated differently, which may not be competitively neutral."It may be possible to build on these efficiencies by applying caps to arrangements of similar economic substance across the payments sector [such as three-party schemes and companion cards operated by groups such as American Express]," the interim report said."The Inquiry considers that payment systems of similar economic substance should be regulated consistently."And on surcharging, the Inquiry said it was "predisposed" to address instances where surcharging was inaccurate, rather than banning surcharging.It posed the question of whether this should be achieved through regulatory enforcement, greater transparency or some other means.Visa said that, if interchange regulation was not revoked, then the FSI should recommend the widening of the definition of payment systems in the Payment Systems (Regulation) Act to give regulatory coverage to more operators.It also recommended that the Reserve Bank lose its discretion to designate payment mechanisms that are covered by regulation.By way of example, Visa pointed out that "PayPal has managed to establish accounts and transactions outside traditional systems. Such players are not subject to the same regulation or oversight."American Express said in its submission: "Constraining the ability of American Express and other industry players without market dominance to grow through capping their ability to deliver value to consumers will have the perverse effect of awarding even more market power to the dominant schemes, stifle product innovation and limit consumer choice."The term 'level playing field' is a smoke screen by the dominant card schemes and their backers to obscure their intention of reducing or even