Commerce Commission Explores Lower Card Fees for Consumer Savings
New York, Sunday, 8 December 2024.
New Zealand’s Commerce Commission is consulting on reducing card fees, potentially saving consumers over $250 million annually and reshaping transaction costs in the financial industry.
Current State of Card Payments
New Zealand’s retail payment landscape currently processes a substantial 95 billion annually through Mastercard and Visa transactions, with merchants bearing approximately 1 billion in service fees [1][2]. These fees vary significantly across payment types, with contactless debit transactions averaging 0.70%, while online debit and credit transactions can range from 1.5% to over 2.5% [1]. The consultation, launched on December 7, 2024, comes as part of the Commerce Commission’s ongoing efforts to enhance competition and efficiency in the retail payment system [1].
Regulatory Framework and Objectives
The initiative builds upon the Retail Payment System Act introduced in 2022, under which the Commission has been actively monitoring the payment system [2]. The primary goal is to streamline the complex fee structure while promoting competition in the payment sector [1]. The Commission envisions potentially standardizing merchant service fees and surcharges to approximately 0.70% across all transaction types [2], a move that could generate significant savings for businesses and consumers alike.
Industry Support and Timeline
Key industry stakeholders, including Retail NZ and Hospitality New Zealand, have expressed support for the consultation, viewing it as a crucial step toward simplifying the complicated payment systems currently in place [1][2]. The Commission has set a deadline of August 20, 2024, for feedback submissions, after which it will evaluate responses to determine the next steps in implementing potential reforms [1].
Economic Implications
The proposed changes could result in annual savings exceeding $250 million for New Zealand consumers and businesses [1][2]. This reduction in transaction costs could potentially stimulate economic activity by lowering operational expenses for retailers while encouraging the development of new payment options [2]. The Commission’s approach aims to balance the interests of various stakeholders while promoting long-term benefits for New Zealand’s financial ecosystem [1].