Charges on credit cards cut

The Commerce Commission has decided to cap interchange fees on Mastercard and Visa commercial credit cards, further reducing local businesses’ costs by about $40 million per annum.

“This action, combined with earlier cuts to interchange fees on personal cards, should reduce businesses’ costs by around $290m each year,” says commissioner Bryan Chapple.

"Reducing these fees will ensure the costs paid to accept Mastercard and Visa cards are reasonable, and improve incentives for payment issuers – like banks – to consider supporting alternative payment methods.

“Encouraging new technologies and entrants in the market will ultimately deliver better outcomes for businesses and consumers as it will drive more innovation, value and choice in how we make and accept payments. Over time, this would support a fairer and more efficient payments system.”

Commercial credit cards make up a small share of transactions but generate a disproportionately larger share of interchange fees, which are paid for by companies via their merchant service fees.

Chapple, pictured, adds: “Commercial credit cards typically offer holders benefits like loyalty programmes, expense reporting and interest-free credit, which are partially paid for by businesses through interchange fees.

“These fees ultimately flow through to retail prices where everyone pays for benefits only some people receive, which creates an inefficient system.”

The new interchange fee caps will come into effect on April 22, 2027. Businesses should review their merchant service-fee arrangements and contact payment service providers to understand how the changes may affect their costs.