The Commerce Commission is examining the possibility of slashing costs associated with Mastercard and Visa payment networks, potentially saving New Zealanders hundreds of millions of dollars annually.

This initiative aims to address the high fees currently impacting both businesses and consumers.

Commission Chair Dr John Small highlighted that New Zealanders spend approximately NZ$95 billion each year using these card networks.

However, the associated costs amount to around NZ$1 billion annually, which is ultimately passed on to consumers through higher prices and surcharges.

Dr Small suggests that reducing these fees could save more than NZ$250 million each year.

The Commission's focus is on reducing the ‘merchant service fee’ charged to businesses when cards are used without being inserted into a terminal.

By addressing this component of the fee, the Commission aims to help businesses lower their retail prices and surcharges, benefiting consumers directly.

“We see the opportunity to reduce a significant component of the merchant service fee,” Dr Small said.

“This should allow businesses to reduce retail prices and surcharges, which would be advantageous for their customers.”

In addition to fee reductions, the Commission is considering simplifying the complex fee structure to make it easier to identify and address excessive surcharges.

Dr Small noted that simplifying these fees could potentially eliminate surcharges altogether in some cases, ensuring they reflect only the true cost of accepting card payments.

The consultation also explores other issues, such as a lack of innovation in payment options due to slow advancements in open banking.

The Commission aims to enhance both the affordability and variety of payment methods available to consumers and businesses.

The public is invited to provide feedback on these issues by 4 pm on 20 August 2024.

Feedback can be provided via this form which is tailored to consumers and merchants.

Alternatively responses can be submitted to [email protected] using the submission template found here.