New Zealand’s Commerce Commission will cap interchange fees on Mastercard and Visa commercial credit cards, but the country’s peak retail body says the regulator has not gone far enough.
The commission’s final decision sets a 0.7 per cent cap on in-person domestic commercial credit card transactions. The commission had initially proposed caps of between 0.5 and 1.5 per cent, depending on whether a card was domestic or foreign-issued and whether the transaction was made in person or online.
The commission estimates the new cap will cut merchant service fees by around $40 million a year. Combined with earlier cuts to interchange fees on personal cards, it expects businesses’ costs to fall by around $290 million annually.
Retail NZ, which supported a new cap in its submission, noted that commercial credit cards draw the highest fees of any card accepted in store.
“Commercial credit cards make up 19 per cent of all interchange fees paid, despite only making up 8 per cent of the value of transactions,” Retail NZ chief executive Carolyn Young said.
“While the interchange fee only makes up part of the merchant service fees paid by retailers, that extra 0.2 per cent would have made a real difference to retailers who accept these cards in store.”
Young added that retailers cannot tell at the point of sale whether a customer is using a personal, international or work card, though she welcomed the commission’s recognition that action was needed.
“We will have to wait and see just how much of a difference the new interchange fee cap will make to retailers, and we encourage the commission to continue to work to reduce other card fees faced by the retail sector,” she said.
New Zealand businesses currently pay approximately $170 million a year in merchant service fees to accept Mastercard and Visa commercial credit cards, with interchange fees accounting for around $125 million of that.
According to the commission, commercial cards typically offer cardholders benefits such as loyalty programs, expense reporting and interest-free credit, which are partly funded by businesses through interchange fees.
“These fees ultimately flow through to retail prices, where everyone pays for benefits only some people receive, which creates an inefficient system,” Chapple said.
The commission also expects lower fees to encourage card issuers such as banks to support alternative payment methods, which it believes will drive innovation and choice in how payments are made and accepted.
The new caps come into effect on April 22, 2027.