The Commerce Commission has today released its draft decision to introduce caps on interchange fees for Mastercard and Visa commercial credit cards. The Commission considers capping these fees will drive a more fair and efficient payments system.

New Zealand businesses currently pay approximately $125m each year in interchange fees to accept Mastercard and Visa commercial credit cards. 

“We expect our proposed interchange fee caps would reduce costs for businesses by $40m annually,” Commissioner Bryan Chapple says.

“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.

“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.

“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. 

“We expect our draft decision would lower barriers businesses and consumers face when adopting alternative payment methods, such as open banking. Over time, this would support more effective competition between payment methods and improve incentives for issuers and consumers to consider lower cost or more innovative alternatives,” Mr Chapple says.

This draft decision builds on previous moves to lower interchange fees on personal cards, which, once all the changes have taken effect, is estimated to save businesses up to $290 million each year. 

This is the first step in New Zealand to regulate interchange fees on commercial credit cards. Commercial credit cards make up a small share of transactions but generate a disproportionately larger share of interchange fees, which are paid by businesses through their merchant service fees.

“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,” Mr Chapple says.