The Commerce Commission issued its final decision to lower interchange fees for New Zealand businesses accepting Visa and Mastercard payments.
These fees, which cost local businesses approximately $1 billion annually, are typically passed on to consumers via surcharges or increased product prices.
ComCom said these expenses are too high and has taken steps to reduce the burden on businesses by about $90 million each 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 $140 million in annual savings to New Zealand businesses,” Commerce Commission Chair John Small said.
“We expect our latest decision to see the average small business save around $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 we were 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,” Small added.
Consumers are likely to see these savings in the form of reduced or fewer surcharges. However, Small said additional regulation may still be necessary to prevent businesses from imposing excessive surcharges.
“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.”
ComCom said it anticipates payment providers to help businesses clearly understand the costs involved in accepting these payment methods so that any surcharges imposed accurately reflect those costs.
“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,” Small said.