This move is expected to deliver significant savings for small and medium enterprises across the country, particularly those in the retail and hospitality sectors.
Interchange fees are a key cost for businesses when processing card transactions, especially for credit and international cards. These charges are often passed on to consumers through surcharges or higher prices.
Under the new regulations, the Commission estimates businesses will collectively save around $90 million annually. The average business could see a reduction of approximately $500 per year, though actual savings will vary depending on the volume and type of transactions processed. The decision builds upon initial fee caps introduced in 2022. These caps had already provided $140 million in annual relief.
The move is a part of a wider effort to improve fairness in the payments system and ease financial pressure on businesses. With the overall cost of interchange fees estimated at around $1 billion, the reduction marks a substantial step towards improving cost-efficiency. This will support competitiveness, particularly for sectors with tight margins.
Hospitality groups, such as the Restaurant Association, welcomed the changes. They have long argued that New Zealand has some of the highest card processing fees among OECD countries. For many operators this decision puts money back into their pockets at a critical time.
While the decision targets personal and foreign-issued credit cards, the Commission has opted not to regulate commercial credit cards and prepaid debit cards for now. However, it has flagged concerns and is expected to revisit these categories in the future.
The Commission is also turning its attention toward excessive surcharging. Although it has not introduced rules to cap surcharges at this stage, it considers them a priority for future regulation. The expectation is that lower interchange fees will reduce the cost base for merchants, which could naturally lead to reduced surcharges for consumers.
Despite the anticipated benefits for local businesses, responses from Visa and Mastercard have been reserved. Both companies expressed concern that the new rules could disrupt competition and investment in New Zealand’s digital payment infrastructure. Mastercard also warned that foreign card transactions in the regulation could potentially harm the tourism sector, estimating up to $600 million in declined sales.
While the long-term effects remain to be seen, the immediate outcome of the Commission’s decision is a win for New Zealand businesses seeking relief from mounting operational costs.
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