The New Zealand Commerce Commission is proposing new interchange fee caps on Visa and Mastercard commercial credit cards to lower costs for businesses.
This move targets the high cost of processing commercial transactions, which currently place a disproportionate financial burden on merchants. By limiting the fees credit card companies charge banks, the regulator aims to stimulate economic efficiency and reduce the overhead for companies accepting these payment methods.
New Zealand businesses currently pay approximately $125 million per year in interchange fees for commercial credit cards [2]. The commission determined that commercial cards generate a disproportionately large share of these fees compared to consumer cards [3].
Under the proposed caps, the regulator estimates that businesses could save about $40 million per year [1]. These savings would stem from a reduction in the fees passed from the card schemes to the banks, and eventually to the merchants who accept the payments.
The proposal is currently in a draft decision phase. The consultation period for stakeholders to provide feedback on these proposed limits closes at midday on July 13, 2024 [1, 3].
Interchange fees are the payments made by the bank receiving a transaction to the bank issuing the card. While consumer card fees are often regulated, commercial fees have historically remained higher, creating a significant cost center for B2B transactions — a gap the Commerce Commission now seeks to close.
“Businesses could save about $40 million per year from the fee caps”
The proposal signals a shift toward tighter regulation of the payment ecosystem in New Zealand. By capping commercial interchange fees, the government is prioritizing merchant cost reduction over the revenue models of global payment networks like Visa and Mastercard, potentially lowering the cost of doing business across the country's B2B sector.
