The Commerce Commission has introduced relief for business operators by moving to regulate commercial credit card interchange fees.
Retail NZ has welcomed the Commerce Commission’s draft decision to finally regulate commercial credit card interchange fees on the Mastercard and Visa networks, but said the proposed caps don't go far enough to level the playing field for Kiwi businesses.
"Retail payments remain a major pain point for retailers. We are pleased the Commission has finally acted on commercial credit cards. Although card providers were given the opportunity, fees have not come down voluntarily," Retail NZ Chief Executive Carolyn Young said.
"Fees on commercial cards are significantly higher than on personal cards. New Zealand merchants are currently paying a staggering NZD 125 million a year to accept domestic and foreign-issued commercial credit cards. These transactions are nearly a fifth of all interchange fees paid, but make up only eight percent of the total value of transactions. This disparity leaves local businesses picking up the bill for corporate card rewards, and ultimately, they pass these costs on to the consumer.”
Young said that while Retail NZ supported the reduction from current rates, it was disappointed that the draft decision proposes domestic commercial caps that sit 0.20 percentage points higher than standard personal credit cards.
“We believe fees should be identical. Whilst the 0.20 percent premium for commercial cards is an improvement, retailers are facing rising costs from every angle and shouldn’t be paying additional fees."
Retail NZ remains concerned that regulating the interchange component alone solves only part of the problem. Interchange accounts for nearly three-quarters of the total Merchant Service Fees (MSF) businesses pay, and the peak body continues to call for full regulation of the total MSF to provide absolute certainty for its members.
"Retail NZ will be working closely with our members to submit formal feedback by the July 13 deadline," Young said.
Commissioner Bryan Chapple said that the Commerce Commission expected the proposed interchange fee caps would reduce costs for businesses by NZD 40 million annually.
“The current level of interchange fees for commercial credit cards sees businesses paying high costs to fund cardholder benefits like loyalty programmes, insurance, and interest-free periods,” said Chapple.
“We understand these benefits are important for some cardholders, but they shouldn’t be paid for through interchange fees. These fees ultimately flow through to retail prices, where everyone pays for benefits only some people receive.”
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