The Commerce Commission saves Kiwis over USD 260 mln a year in fees

These fees are passed on to consumers through the cost of goods and services, and surcharges and it can save Kiwis over USD 260 million a year in payment fees.

Factors that influenced the initiative

In July 2024, the Commission revealed consumers spend approximately USD 95 billion each year using Visa and Mastercard products. New Zealand businesses incur around USD 1 billion in fees to provide these payment options to their customers, with the average merchant service fee for small businesses being around 1.2% to 1.5%. This means costs for some businesses will be more, and for other businesses will be less.

When someone uses a Mastercard or Visa credit card or makes a contactless payment, such as Paywave, the business receiving the payment is charged a merchant service fee. Owners potentially seek to recover this fee in the form of surcharges or higher retail prices. Some businesses, whether due to finding it difficult to understand the fees they are being charged or because they seek to make a margin on their cost of payments, set their surcharges higher than the actual merchant services fees.

Excessive surcharging is not easy to spot. Different businesses pay different fees and the Visa and Mastercard costs are quite complex and variable. It is a challenge for Kiwis to understand what fees are reasonable and fair when these costs add up over time.

The Commission aims to simplify these transactions and expects any surcharges to not exceed costs, encouraging businesses paying more than 1.5% to check if they can get a better deal from their payment provider.

To tackle this issue, the Commission is proposing a reduction of approximately USD 260 million a year to a component of the fees charged in New Zealand. This initiative will reduce and simplify payment costs for Kiwi businesses and save merchants and consumers a significant amount of money.

ComCom projects that consumers will benefit from lower surcharges of around 0.7% to 1%, or through prices of goods and services that reflect lower fees. It also plans to extend its research to determine whether and to what extent regulation of surcharges is necessary.