The Commerce Commission has consulted on the potential to reduce costs to New Zealanders using the Mastercard and Visa payment networks, which affect nearly all consumers and businesses.
This is part of the Commission’s responsibility to promote competition and efficiency within the retail payment system, the most used financial service in Aotearoa, New Zealand.
Commission Chair John Small said consumers spend approximately $95 billion annually using Mastercard and Visa in New Zealand, which has resulted in higher retail prices and surcharges of around $1 billion annually for businesses and consumers.
“We think this cost is too high, especially compared to our international peers, and see the potential to reduce these fees by more than $250 million annually,” said Dr Small.
When someone uses a Mastercard or Visa card without inserting it in a terminal, the business receiving the payment is charged a ‘merchant service fee’.
“We see the opportunity to reduce a significant component of the merchant service fee, which should allow businesses to reduce retail prices as well as surcharges, for the benefit of their customers.”
The Commission also believes these fees are unnecessarily complex, which could increase consumers' surcharges.
“Reducing and simplifying these fees could reduce surcharges or even remove the need for surcharging altogether in some cases. This would also make it easier for consumers, the Commission and the industry to identify where surcharges are excessive.”
Surcharges should only reflect the costs of accepting these card payments, and the Commission has been exploring changes to fees that could reduce surcharges to 0.7 percent or less.
This consultation also asked questions about other issues the Commission considered may require attention, such as a need for more innovation and pace, which may be barriers to new and more secure payment options made possible through open banking.
“Our focus is on the greatest benefit to consumers and merchants, and we see scope to both reduce fees and increase choice for the long-term benefit of New Zealand consumers and businesses.”
The Commission will inform its next steps by the 20th of August 2024.
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