- New Zealand’s Commerce Commission proposes a $260 million annual reduction in merchant service fees for Visa and Mastercard payments.
- Businesses are urged to pass savings to consumers, with legislation possible if changes do not benefit customers.
What happened: Commerce Commission addresses Google Pay fees
New Zealand’s Commerce Commission has announced a draft decision to cut merchant service fees businesses pay when accepting Visa and Mastercard payments. These fees, which total nearly $1 billion annually, are a significant cost for businesses, often passed on to customers through higher prices. The proposed changes could save businesses $260 million each year by simplifying and reducing these charges.
John Small, chair of the Commerce Commission, highlighted the issue, stating, “Businesses often surcharge more than their actual costs due to the complexity of these fees.” The reduction, estimated at 0.7% to 1%, is expected to make pricing more transparent and ensure fair practices. Businesses are also being reminded to avoid excessive surcharges, with potential legislation to enforce the changes if savings are not reflected in consumer pricing.
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Why it’s important
This fee reduction marks a significant shift for New Zealand’s retail sector, potentially benefiting both businesses and consumers. Lower merchant service fees are expected to reduce operating costs for businesses, improving profit margins or enabling lower retail prices. Consumers, who indirectly pay these fees, stand to benefit from fairer pricing practices.
Globally, similar efforts to regulate payment fees are being seen, reflecting a growing focus on transparency and fairness in digital and card-based payments. With Visa and Mastercard dominating the payment landscape in New Zealand, this regulation could influence other countries to take similar steps. The initiative aligns with trends advocating for consumer protection and financial inclusivity in an increasingly cashless economy.
