New Zealand's Commerce Commission has issued a draft decision to reduce fees paid by Kiwi businesses for accepting Visa and Mastercard payments.
In July the Commission revealed consumers spend approximately $95 billion each year using Visa and Mastercard products. New Zealand businesses incur around $1 billion in fees to provide these payment options to their customers.
Commission chair, John Small, says: “We’re proposing a reduction of around $260 million a year to the largest component of the fees charged to New Zealand businesses to receive Visa and Mastercard payments. We’re also setting the clear expectation that payment providers and businesses should pass these savings on to customers.”
Businesses incur a ‘merchant service fee’ when receiving payments by card, which they seek to recover in higher retail prices.
The Commission says that some businesses, whether due to finding it difficult to understand the fees they are being charged or because they seek to make a margin on their cost of payments, set their surcharges higher than the actual merchant services fees.
“We’ve been clear businesses should not be surcharging their customers more than the cost to them of accepting that payment,” says Small. “Excessive surcharging is not easy to spot. Different businesses pay different fees and the Visa and Mastercard fees are themselves quite complex and variable. Simplifying these fees is also part of our focus."
He says the expectation is for a reduction of between 0.7% to one percent on merchant surcharges and will seek to legislate should price changes not filter through to the end-consumer.