Locals may soon benefit from significant savings on payment fees, as the Commerce Commission (ComCom) has issued a draft decision proposing to reduce the fees Kiwi businesses pay for accepting Visa and Mastercard payments.

The proposal could result in a reduction of approximately $260 million annually in fees charged to businesses, which are typically passed on to consumers through higher prices or surcharges on goods and services.

John Small, the Commission’s Chair, outlined the proposed reduction, stating, “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.”

In July, the Commission revealed that New Zealanders spend around $95 billion each year using Visa and Mastercard, with businesses incurring approximately $1 billion in fees to process these payments.

“This work is the next step to further reduce, and simplify, payment costs for New Zealand businesses, and to save merchants and consumers a considerable amount of money,” said Dr Small.

The fees that businesses pay when customers use cards like Visa or Mastercard are known as merchant service fees.

These fees are often recovered by businesses through surcharges or increased prices for goods.

Some businesses, however, may set surcharges higher than necessary, resulting in extra costs for consumers.

“We’ve been clear businesses should not be surcharging their customers more than the cost to them of accepting that payment,” said Dr Small.

The Commission is working to simplify these complex fees and expects that, if the draft decision is implemented, consumers could see a reduction in surcharges of around 0.7% to 1.0%, or benefit from lower prices on goods and services.

The average merchant service fee for small businesses is between 1.2% and 1.5%.

Businesses with fees higher than 1.5% are encouraged to check whether they could secure a better deal from their payment providers.

The Commerce Commission is now seeking public feedback on the draft decision.

Submissions are open until 5 pm on 18 February 2025.

For further details or to provide feedback, visit the Commission’s website or submit via the provided online forms for consumers and merchants.

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