The quiet fee that hits hardest
Every time a business accepts a credit card payment, a chain of wholesale fees kicks in. The largest component, interchange, flows from the merchant’s bank to the cardholder’s bank. Merchants never see the invoice directly. It is bundled into a “merchant service fee” set by their payment processor. But interchange is the dominant cost, and it is set by Visa and Mastercard, not negotiated between banks and the businesses paying it.
For standard consumer cards, the rates are irritating but manageable. Commercial credit cards are a different story. They carry higher interchange rates, justified by the card networks as funding richer rewards programmes, expense management tools, and elevated credit limits. The result is that any merchant processing a payment from a corporate Visa or business Amex pays substantially more per transaction than for a consumer swipe, with no mechanism to refuse or negotiate.
The Commerce Commission has launched an investigation into whether this fee structure is fair and whether caps should be imposed. Commerce Commissioner Bryan Chapple has noted that commercial credit cards “make up a small share of transactions but generate a disproportionately large share of fees paid by businesses.”
Where the dollars actually stack up
The arithmetic explains why this matters. Commercial cards cluster around high-value transactions: professional services invoices, trade supply orders, corporate travel bookings. When a law firm processes a $50,000 client payment on a corporate card, even a modest percentage interchange rate generates hundreds of dollars in fees on a single transaction. Scale that across an entire year of B2B payments and the cumulative cost is material.
The businesses absorbing the greatest pain are not the Countdowns and Warehouse Groups of the world. Large retailers already negotiate bespoke merchant service agreements and rarely pay full rack interchange rates. It is the mid-market and SME segment, the trade suppliers, hospitality operators, and professional services firms, that bear the brunt. These businesses typically lack the transaction volume to extract meaningful discounts from their payment processors and have limited ability to surcharge or steer customers toward cheaper payment methods.
New Zealand has been slow to act
Peer markets moved on interchange years ago. Australia’s Reserve Bank capped interchange fees in the early 2000s and has tightened those caps since. The EU introduced hard caps under its 2015 Interchange Fee Regulation, setting consumer debit at 0.2% and consumer credit at 0.3%. The UK retained equivalent caps post-Brexit.
But here is the detail that matters for this investigation: in most of those markets, commercial and business cards were initially carved out or subject to lighter regulation. The Commerce Commission appears to be going directly at that gap in New Zealand, targeting the category that international regulators left for later.
The Commission’s retail payments market study, conducted in recent years, found that New Zealand interchange rates were among the higher rates in comparable markets and recommended intervention. The current investigation is an escalation of that work.
The rewards trade-off nobody wants to discuss
Lower interchange on commercial cards means less revenue flowing to issuing banks. That revenue currently funds the corporate card rewards programmes that business owners use enthusiastically: Airpoints, cashback, lounge access, travel credits.
If caps are introduced, banks will restructure or reduce those programmes. This is the uncomfortable irony at the centre of the investigation. The same business owner who saves $15,000 a year in merchant fees on incoming payments may simultaneously lose $8,000 in rewards value on the corporate card in their wallet. Whether the net position is positive depends on whether a given business is a larger net acceptor or net spender on commercial cards.
For businesses that primarily accept card payments, professional services firms, wholesalers, trade suppliers, the maths tilts decisively in favour of caps. For businesses that primarily spend on corporate cards and accept few card payments themselves, the rewards haircut may sting more than any merchant fee savings.
What happens next
Based on the Commission’s established process, the investigation will move through consultation, draft determination, and submissions from card networks, banks, merchants, and industry bodies before a final decision. That timeline typically stretches 12 to 24 months from launch to implementation.
Visa and Mastercard will argue that interchange funds innovation and that caps will reduce card benefits. Merchant groups will counter that the current structure is an unregulated tax on businesses with no competitive alternative. Both arguments have merit, but the weight of international evidence suggests interchange caps reduce merchant costs without collapsing the payments ecosystem.
The real question is not whether caps are coming. It is whether New Zealand will follow Australia’s incremental approach or move faster. For the thousands of businesses quietly absorbing inflated commercial card fees on every invoice, the answer cannot come soon enough.
Sources
- Commerce Commission targets credit card fees in new investigation (Beehive)
- Commerce Commission targets credit card fees in new investigation (RNZ)
- Credit card fee caps coverage (NZ Herald)
- Commerce Commission investigates merchant credit card fees (Stuff)
- Business card fees under Commerce Commission scrutiny (BusinessDesk)
- Interest.co.nz analysis of credit card merchant fees