The Commerce Commission has released a draft decision to cap interchange fees on Mastercard and Visa commercial credit cards. The move could reduce business costs by $40 million annually — costs that businesses say flow through into retail prices paid by all consumers.
New Zealand businesses could soon pay less to accept commercial credit card payments, following a draft decision by the Commerce Commission to cap interchange fees on Mastercard and Visa commercial credit cards.
The Commission estimates businesses currently pay around $170 million each year in merchant service fees for Mastercard and Visa commercial credit card transactions. Of that, approximately $125 million comes from interchange fees — the portion that flows from the business's acquiring bank to the cardholder's issuing bank with each transaction.
Commissioner Bryan Chapple said the current level of interchange fees meant businesses were effectively cross-subsising benefits that only some cardholders received — things like loyalty programme points, insurance, and interest-free periods.
"We understand these benefits are important for some cardholders, but they shouldn't be paid for through interchange fees," Chapple said. "These fees ultimately flow through to retail prices, where everyone pays for benefits only some people receive."
Commerce and Consumer Affairs Minister Cameron Brewer said New Zealand businesses were paying interchange fees that were nearly double those in Australia. Capping them would mean fairer costs for businesses and less pressure on prices at the checkout, he said.
The proposed cap is the first step in New Zealand to regulate interchange fees on commercial credit cards specifically. Commercial cards make up a small share of total transactions but generate a disproportionately large share of interchange fees.
The Commission expects the change to lower barriers for businesses and consumers using alternative payment methods, including open banking. Over time, it said the change would support more effective competition between payment options and provide stronger incentives for card issuers to offer lower-cost or more innovative alternatives.
The Commission is accepting submissions on its draft decision and expects to make a final ruling later this year.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.