Commerce Commission Plans To Slash Card Fees

The Commerce Commission has released a draft decision that could dramatically reduce the fees businesses pay for accepting Visa and Mastercard payments, potentially saving New Zealanders over $260 million annually.

“These fees are passed on to consumers through the cost of goods and services, and surcharges,” the Commerce Commission stated.

The Commission’s chairperson, John Small, said the proposal would cut the largest portion of these fees, setting expectations that savings should benefit shoppers. “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,” he said.

Currently, New Zealand consumers spend approximately $95 billion annually on Visa and Mastercard transactions, generating nearly $1 billion in fees for businesses offering these payment methods.

The draft decision also highlights the complexity of merchant service fees. When consumers use credit cards or contactless options like Paywave, businesses are charged fees that are often recouped through surcharges or increased prices.

“Some businesses, whether due to finding it difficult to understand the fees they are being charged or because they seek to make a margin on their cost of payments, set their surcharges higher than the actual merchant services fees,” the Commission said.

Small emphasised the importance of simplifying the fee structure to ensure fairness. “Excessive surcharging is not easy to spot. Different businesses pay different fees and the Visa and Mastercard fees are themselves quite complex and variable.”

If the decision proceeds, the Commission expects surcharges to drop to around 0.7% to 1.0%, compared to the current 1.2% to 1.5% average for small businesses.

The Commission is also considering future steps to regulate surcharges further, with feedback on the proposal open until February 18.

Retail NZ welcomed the draft decision, noting the complexity of retail payment systems. Chief executive Carolyn Young said, “We have called for changes in the system, to make it easier for retailers to understand and enable them to provide better customer experiences.”

Commerce and Consumer Affairs Minister Andrew Bayly supported the decision, describing it as an “important win” for both consumers and businesses. “Credit and debit card fees are a pain for consumers. Nobody appreciates being hit by a big surcharge or Paywave fee at the checkout,” he said.

Bayly explained that the proposal aligns with the Retail Payment System Act, ensuring businesses charge only the actual cost of processing payments. “Once implemented, Kiwis can expect to pay lower and more consistent fees at the checkout,” he added.