Commission cuts commercial card fees to save businesses $40 million a year
The Commerce Commission has decided to cap interchange fees on Mastercard and Visa commercial credit cards, further reducing local businesses’ costs by around $40 million a year.
“This action, combined with earlier cuts to interchange fees on personal cards, should reduce businesses’ costs by around $290 million each year,” Mr Chapple says.
"Reducing these fees will ensure the costs businesses pay to accept Mastercard and Visa cards are reasonable and improve the incentives for payment issuers, like banks, to consider supporting alternative payment methods.
“We believe encouraging new technologies and entrants in the market will ultimately deliver better outcomes for Kiwi businesses and consumers as it will drive more innovation, value, and choice in how we make and accept payments.
“Over time, this would support a fairer and more efficient payments system for New Zealand" Mr Chapple says.
Commercial credit cards make up a small share of transactions but generate a disproportionately larger share of interchange fees, which are paid for by businesses through their merchant service fees.
“Commercial credit cards typically offer cardholders benefits like loyalty programmes, expense reporting, and interest-free credit, which are partially paid for by businesses through interchange fees,” Mr Chapple says.
“These fees ultimately flow through to retail prices, where everyone pays for benefits only some people receive, which creates an inefficient system,” Mr Chapple says.
The new interchange fee caps will come into effect on 22 April 2027. Businesses should review their merchant service fee arrangements and contact their payment service providers to understand how the changes may affect their costs.
Background
For more information view our final decision and reasons paper.
A commercial credit card is a credit card issued to a business, commonly used to enable employees to make work-related purchases.
What is an interchange fee?
Interchange fees are paid by a business’ acquirer (that is, the bank or other payment service provider that enables a business to accept credit and debit card payments) to the customer's card issuer for each transaction on the Mastercard and Visa networks.
New Zealand businesses currently pay approximately $170 million in merchant service fees each year to accept Mastercard and Visa commercial credit card payments, with interchange fees making up approximately $125 million of this.
Interchange exists, in theory, to balance the benefits and costs in the Mastercard and Visa networks between the card issuing side and the card acquiring side of the payment network. It provides a revenue stream incentive for issuers to enter and supply cards to cardholders. Interchange can help fund issuing credentials and physical cards, anti-fraud measures, fraud losses, scheme fees, rewards, and digital wallet fees.
The Commission's role
The Commission has a core role in promoting an efficient and competitive payment system. We do so through monitoring, engagement across the sector and setting and enforcing rules that apply to designated payment networks.
Increased innovation, efficiency, and competition in the sector will play a major part in driving costs down for the benefit of all Kiwis.
The Commission is also focussing on the adoption and uptake of open banking payments – view our latest monitoring snapshot.