Businesses to Save $40m on Card Fees
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Businesses will pay $40 million less each year to accept commercial credit cards under new caps proposed by the Commerce Commission.
The regulator wants to limit interchange fees on Mastercard and Visa commercial credit cards, which currently cost New Zealand businesses $125 million annually.
"We expect our proposed interchange fee caps would reduce costs for businesses by $40m annually," Commissioner Bryan Chapple says.
The fees fund cardholder perks like loyalty programmes, insurance and interest-free periods. But Chapple argues everyone ends up paying for benefits only some receive.
"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," he says.
"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."
The corner dairy problem. "We don't think the corner dairy should be forced to absorb additional costs or increase their prices to cover the costs of rewards and benefits only those with commercial credit cards get," Chapple says.
Commercial credit cards make up a small share of transactions but generate a disproportionately large share of interchange fees. Businesses pay these through merchant service fees — currently about $170 million annually, with $125 million going to interchange.
The move builds on earlier caps for personal cards, which will save businesses up to $290 million each year once fully implemented.
Chapple expects the changes will lower barriers for alternative payment methods like open banking. "Over time, this will support more effective competition between payment methods and improves incentives for issuers and consumers to consider lower cost or more innovative alternatives," he says.
This is New Zealand's first attempt to regulate commercial credit card interchange fees. The Commission wants feedback from all stakeholders, especially businesses who both hold cards and accept them.
"We want to hear from all stakeholders on our draft, and especially businesses as they hold a unique role as both cardholders and card accepters. We expect to make our final decision later this year," Chapple says.
