Plans to limit interchange fees for Mastercard and Visa commercial credit cards outlined in Commerce Commission draft decision

The Commerce Commission has released a draft decision which outlines plans to cap interchange fees on Mastercard and Visa commercial credit cards.

Currently, New Zealand businesses pay approximately $170 million in merchant service fees each year to accept Mastercard and Visa commercial credit card payments. Interchange fees make up approximately $125 million of this figure.

Commissioner Bryan Chapple says the proposed interchange fee caps would reduce businesses’ costs by $40m annually.

“The current level of interchange fees for commercial credit cards sees businesses paying high costs to fund cardholder benefits like loyalty programmes, insurance, and interest-free periods,” he says.

“We understand these benefits are important for some cardholders, but they shouldn’t be paid for through interchange fees. These fees ultimately flow through to retail prices, where everyone pays for benefits only some people receive.”

Interchange fees are paid by a business’ ‘acquirer’ – the bank or another payment service provider that enables a business to accept credit and debit card payments – which is then paid to the customer's card issuer for each transaction on the Mastercard and Visa networks.

The Commission says interchange fees exist 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. 

Interchange fees provide a revenue stream incentive for issuers to enter and supply cards to cardholders as they can help fund issuing credentials and physical cards, anti-fraud measures, fraud losses, scheme fees, rewards and digital wallet fees.

The Commission says this is the first step in New Zealand to regulate interchange fees on commercial credit cards.

Commercial credit cards make up a small share of transactions but generate a disproportionately larger share of interchange fees, which are paid by businesses through their merchant service fees, according to the Commission.

“We want to hear from all stakeholders on our draft and especially businesses as they hold a unique role as both cardholders and card accepters,” Chapple says.

“We expect our draft decision will lower barriers businesses and consumers face when adopting alternative payment methods, such as open banking. Over time, this will support more effective competition between payment methods and improve incentives for issuers and consumers to consider lower-cost or more innovative alternatives.”

The Commission expects to make a final decision later this year.

Commerce and Consumer Affairs Minister Cameron Brewer says the fees that New Zealand consumers pay in interchange fees are nearly twice as high as those in Australia.

“Capping them means fairer costs for the businesses we rely on, and less pressure pushing up the price you pay at the checkout,” he says.

Fit for purpose

Payments regulation has come into focus for the Government, with the Ministry of Business, Innovation and Employment (MBIE) opening consultation on whether payment services regulation is fit for purpose in May. 

Questions being asked in the consultation include whether the current rules around payment services support competition and innovation, or are they creating unnecessary barriers, and whether the current protections for consumers and businesses are clear and fit for purpose. The consultation is due to close on 3 July.

The Commission’s draft decision to cap interchange fees on commercial credit cards also follows its previous moves to lower interchange fees on personal cards.

Its final decision in 2025 on interchange fees on the Visa and Mastercard networks delivered only a third of the savings estimated for consumers in its December 2024 draft decision, falling from $260 million to $90 million.