The Commerce Commission has issued its final decision to reduce interchange fees paid by Kiwi businesses to accept Visa and Mastercard payments.
It costs New Zealand businesses around NZD 1 billion a year to accept Visa and Mastercard payments, which is often passed onto their customers through surcharges and higher product costs.
The Commission has determined this cost is too high and has acted to reduce this cost for businesses by around NZD 90 million a year.
“This is an important step in our continued work to cut costs for businesses and consumers. Our latest decision builds on the initial fee caps set in 2022, which led to NZD 140 million in annual savings to New Zealand businesses,” Commerce Commission Chair Dr John Small said.
“This decision cuts the cost for businesses accepting payments made through credit cards and foreign-issued cards, which are often the most expensive for businesses to accept. We expect our latest decision to see the average small business save around NZD 500 each year in lower fees. Individual businesses could save more or less, depending on the mix of transactions they accept.”
In making this decision, Dr Small said the Commerce Commission was careful to balance lower costs for merchants today with keeping incentives for new fintechs to innovate and challenge the big established incumbents.
“That meant leaving enough money in the system to keep it competitive and safe from fraud and scams over the long term.”
Consumers can expect these cost savings to flow through to fewer and lower surcharges, but regulation may still be needed to curb excessive surcharging.
“We’ll be exploring what regulation may be needed to address excessive surcharging, which we consider to be anything more than the cost businesses face to accept Visa and Mastercard payments,” Dr Small added.
The Commission expects payments providers to support businesses to understand their costs to accept these payment types, so where businesses choose to surcharge it accurately reflects their cost.
“We have decided not to regulate the fees for commercial credit card or prepaid debit card payments at this time, based on feedback we received during consultation. We’re looking to understand more before deciding if these payment types should be regulated.”
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