The regulator has issued a final decision, saying the cost was too high, and their decision would save businesses around $90 million a year.
It said the average business would save around $500 each year in lower fees, but individual businesses could save more or less, depending on the mix of transactions they accept.
The commission put the overall cost of interchange fees at about $1 billion for businesses, which were often passed on to customers through surcharges and higher product costs.
“This is an important step in our continued work to cut costs for businesses and consumers,” Commerce Commission chair John Small said. “Our latest decision builds on the initial fee caps set in 2022, which led to $140 million in annual savings to New Zealand businesses.”
“This decision cuts the cost for businesses accepting payments made through credit cards and foreign-issued cards, which are often the most expensive for businesses to accept.”
The commission said it would also explore what regulations may be needed to address excessive surcharging.
The commission expected payments providers to support businesses understand their costs to accept these payment types.
It has also decided not to regulate fees for commercial credit card or prepaid debit card payments.
Small told Nine To Noon the interchange fees were too high and they were bringing them down on a product by product basis to suit different types of payment, such as domestic or foreign cards, personal or corporate, in person or online.
“That’s going to result in merchants having $90 million a year more in their pockets in aggregate,” Small said.
Small said it had exempted commercial and pre-paid cards from the fee cap because it did not have enough information about them at this stage, but it did have concerns.
He said it had not lowered the cap as much as indicated in a draft decision, which had suggested annual savings of $260m.
“The reason that number has come down to $90 million is because we listened carefully to the feedback we received on that proposal and decided we needed to leave a bit more money in the system to incentivise new entry and dynamic competition we really want to see.”
However, the commission has not moved on surcharges on consumers for using paywave in shops.
Small said it had wanted to first tackle the intercharge fees which set the cost base for the system, but consumer surcharges were on its agenda.
“We still believe that some regulation is needed for surcharging, and that is the next step in this process … so we’re coming to that.”
He said the changes made would take a lot of the heat out of the issue because merchants would not be paying so much and so surcharges would be lower anyway.
Restaurant body welcomes initiative
The Restaurant Association said the Commerce Commission’s decision to regulation interchange fees on credit cards offered much-needed cost relief for hospitality businesses.
Association chief executive Marisa Bidois said the regulation would save industry members about $90m a year.
“Hospitality businesses have long been burdened by some of the highest card payment fees in the OECD,” Bidois said.
“This decision puts money back into the hands of operators at a time when every dollar counts.”
Bidois said concerns about excessive surcharges at the point of payment was something that should be kept under review.
“Our recommendation was to allow the new fee structure to bed in before taking further steps. We’re pleased to see ComCom acknowledge this.”
The association was also urging payment providers to be transparent about their fees and not shift the cost burden elsewhere.
“We’ll be watching closely to ensure payment providers don’t undermine this win for businesses by increasing fees in other areas,” Bidois said.
