The New Zealand Commerce Commission has announced a draft decision to reduce the fees businesses pay for accepting Visa and Mastercard card payments, aiming to cut costs and benefit both merchants and consumers.
The Cost of Card Payments
Each year, New Zealand consumers spend approximately $95 billion using Visa and Mastercard. Businesses across the country bear an estimated $1 billion in fees to support these payment options, costs often passed on to customers through higher retail prices.
The Commission proposes reducing the largest component of these fees by approximately $260 million annually.
Passing the Savings to Consumers
John Small, chair of the Commerce Commission, emphasized the need for these savings to benefit end-users:
“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.”
Simplifying Fee Structures and Addressing Overcharges
Merchant service fees are a primary component of what businesses pay when processing card payments. However, some businesses add surcharges exceeding their actual costs, creating unfair price burdens on customers.
Small elaborated:
“We’ve been clear businesses should not be surcharging their customers more than the cost to them of accepting that payment. Excessive surcharging is not easy to spot. Simplifying these fees is also part of our focus.”
To address these challenges, the Commission plans to reduce merchant surcharges by 0.7% to 1%. Additionally, legislative measures may be introduced to enforce fair pricing if businesses fail to lower charges appropriately.
What’s Next?
The proposed changes aim to ensure transparency in payment fees while directly benefiting consumers through reduced retail costs. Merchants are encouraged to comply with these adjustments and avoid surcharges exceeding actual payment processing costs.