The Commerce Commission has released its draft decision to introduce caps on interchange fees for Mastercard and Visa commercial credit cards.
The Commission considers that capping these fees will drive a fairer and more efficient payment system. New Zealand businesses currently pay approximately NZD 125m in interchange fees each year to accept Mastercard and Visa commercial credit cards.
“We expect our proposed interchange fee caps would reduce costs for businesses by NZD 40m 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 Commissioner Bryan 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.”
Chapple added that the corner dairy should not be forced to absorb additional costs or raise prices to cover the costs of rewards and benefits available only to those with commercial credit cards.
He expects that the draft decision will lower barriers that businesses and consumers face when adopting alternative payment methods, such as open banking. Over time, this will support more effective competition between payment methods and improve incentives for issuers and consumers to consider lower-cost or more innovative alternatives.
This draft decision builds on previous moves to lower interchange fees on personal cards, which, once all changes take effect, are estimated to save businesses up to NZD 290 million each year.
This is the first step in New Zealand to regulate interchange fees on commercial credit cards. Commercial credit cards account for a small share of transactions but generate a disproportionately large share of interchange fees, which businesses pay through their merchant service fees.
“We want to hear from all stakeholders on our draft, and especially businesses, as they hold a unique role as both cardholders and card acceptors. We expect to make our final decision later this year.”
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