Commerce Commission moves to cap Visa, Mastercard business card fees

The Commerce Commission is proposing new interchange fee caps on Mastercard and Visa commercial credit cards that will lower costs for businesses by some $40 million a year.

The draft decision said New Zealand businesses paid about $125m a year in interchange fees to accept Mastercard and Visa commercial credit cards.

“This is the first step in New Zealand to regulate interchange fees on commercial credit cards,” ComCom Commissioner Bryan Chapple said.

The regulator has opened its draft decision for feedback. Submissions close at midday on July 13.

While commercial credit cards comprised a small share of transactions, they generated a disproportionately larger share of interchange fees, the ComCom said.

These were paid by businesses through their merchant service fees.

ComCom said its latest draft decision was built on previous moves to lower interchange fees on personal cards.

NZ businesses paid about $170m in merchant service fees each year to accept Mastercard and Visa commercial credit card payments.

Of that amount, interchange fees accounted for about $125m, the ComCom said.

“We expect our proposed interchange fee caps would reduce costs for businesses by $40m annually,” he continued.

At their present level, interchange fees saw businesses paying high costs to fund cardholder benefits, such as 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,” Chapple said.

“These fees ultimately flow through to retail prices, where everyone pays for benefits only some people receive.”

- BusinessDesk