Credit card company Visa is urging that merchants be prohibited from adding surcharge fees to purchases made with credit cards at the point of sale.
In December last year, the Commerce Commission announced a draft decision aimed at reducing the fees Kiwi businesses pay for accepting Visa and Mastercard payments. Card interchange fees are passed on by banks to merchants, with the actual rate depending on each merchant’s ability to negotiate. This means some merchants pay higher fees than others.
Visa country manager Anthony Watson stated that attention should not be directed toward Visa’s interchange fees, as their rates are essentially in line with those charged globally.
“What the commission is proposing is to reduce that fee down to a level that would compromise or risk where those investments can be made,” Watson said.
Watson explained that interchange fees support the development of payment system innovations and should be regarded by merchants as a standard business expense.
Meanwhile, ComCom acknowledged that some merchants were overcharging consumers at the point of sale and warned that this practice is unacceptable, even though it can be hard for consumers to identify.
“We’ve been clear that businesses should not be surcharging their customers more than the cost to them of accepting that payment,” Watson said.
According to the Commerce Commission, the typical merchant service fee for small businesses ranges from approximately 1.2% to 1.5% of the transaction amount.
The commission also reported that New Zealanders spend an estimated $45 million to $65 million each year on excessive surcharges.