The Commerce Commission has announced a draft decision aimed at reducing the fees Kiwi businesses pay for accepting Visa and Mastercard payments. This move is expected to lower surcharges and retail prices, benefiting both businesses and consumers across New Zealand.
“We’re proposing a reduction of around $260 million a year to the largest component of the fees charged to New Zealand businesses to receive Visa and Mastercard payments. We’re also setting the clear expectation that payment providers and businesses should pass these savings on to customers,” Commission Chair John Small said.
When a customer uses a Mastercard or Visa credit card or makes a contactless payment, the business that receives the payment incurs a merchant service fee. To offset this cost, businesses are likely to recover the fee by implementing surcharges or raising retail prices.
“If our draft decision is implemented, we’d expect to see consumers benefit from lower surcharges of around 0.7% to 1.0%, or through prices of goods and services that reflect the lower fees.”
“The average merchant service fee for small businesses is around 1.2% to 1.5% [of the transaction value]. This means costs for some businesses will be more, and for other businesses will be less. The Commission expects any surcharges to not exceed costs and encourages businesses paying more than 1.5% to check if they can get a better deal from their existing or new payment provider.”
The Commerce Commission reported that New Zealanders spend between $45 million and $65 million each year on “excessive” surcharges. The Commission emphasised that these surcharging rates need to decrease, and with a reduction in interchange fees, it expects that surcharge rates will also follow suit.
The Commission has indicated that some form of regulation on surcharging will be necessary due to the prevalence of excessive surcharges, even if the proposed draft decision is implemented.
“We expect to consult on surcharging regulations in the new year. We are considering options such as a maximum surcharge rate, requirements to display average merchant service fees, and/or requiring terminal providers to sight evidence of average merchant service fees prior to uploading a surcharge rate to a terminal.”
The Commission is inviting feedback on this draft decision until 5 PM on February 18, 2025.