Commerce Commission moves to lower debit, credit card surcharges
The regulator has issued a final decision, saying the cost was too high, and their decision would save businesses around $90 million a year.
It said the average business would save around $500 each year in lower fees, but individual businesses could save more or less, depending on the mix of transactions they accept.
The commission put the overall cost of interchange fees at about $1 billion for businesses, which were often passed on to customers through surcharges and higher product costs.
"This is an important step in our continued work to cut costs for businesses and consumers," Commerce Commission chair John Small said. "Our latest decision builds on the initial fee caps set in 2022, which led to $140 million in annual savings to New Zealand businesses."
"This decision cuts the cost for businesses accepting payments made through credit cards and foreign-issued cards, which are often the most expensive for businesses to accept."
The commission said it would also explore what regulations may be needed to address excessive surcharging.
The commission expected payments providers to support businesses understand their costs to accept these payment types.
It has also decided not to regulate fees for commercial credit card or prepaid debit card payments.
Small told Nine To Noon the interchange fees were too high and they were bringing them down on a product by product basis to suit different types of payment, such as domestic or foreign cards, personal or corporate, in person or online.
"That's going to result in merchants having $90 million a year more in their pockets in aggregate," Small said.
Small said it had exempted commercial and pre-paid cards from the fee cap because it did not have enough information about them at this stage, but it did have concerns.
He said it had not lowered the cap as much as indicated in a draft decision, which had suggested annual savings of $260m.
"The reason that number has come down to $90 million is because we listened carefully to the feedback we received on that proposal and decided we needed to leave a bit more money in the system to incentivise new entry and dynamic competition we really want to see."
However, the commission has not moved on surcharges on consumers for using paywave in shops.
Small said it had wanted to first tackle the intercharge fees which set the cost base for the system, but consumer surcharges were on its agenda.
"We still believe that some regulation is needed for surcharging, and that is the next step in this process ... so we're coming to that."
He said the changes made would take a lot of the heat out of the issue because merchants would not be paying so much and so surcharges would be lower anyway. Restaurant body welcomes initiative
The Restaurant Association said the Commerce Commission's decision to regulation interchange fees on credit cards offered much-needed cost relief for hospitality businesses.
Association chief executive Marisa Bidois said the regulation would save industry members about $90m a year.
"Hospitality businesses have long been burdened by some of the highest card payment fees in the OECD," Bidois said.
"This decision puts money back into the hands of operators at a time when every dollar counts."
Bidois said concerns about excessive surcharges at the point of payment was something that should be kept under review.
"Our recommendation was to allow the new fee structure to bed in before taking further steps. We're pleased to see ComCom acknowledge this."
The association was also urging payment providers to be transparent about their fees and not shift the cost burden elsewhere.
"We'll be watching closely to ensure payment providers don't undermine this win for businesses by increasing fees in other areas," Bidois said.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
RNZ News
13 hours ago
- RNZ News
Commerce Commission dismisses Federated Farmers complaint on net-zero banking
ANZ, ASB, BNZ, Westpac, and Rabobank are all signatories to the Net-Zero Banking Alliance. Photo: RNZ The Commerce Commission has dismissed a Federated Farmers complaint that five major local banks acted like a cartel, tying lending to climate targets. ANZ, ASB, BNZ, Westpac, and Rabobank are all signatories to the Net-Zero Banking Alliance, which aligns lending policies to climate change goals. Together, the five banks account for 97 percent of agricultural lending in New Zealand. The Commission's general manager competition Vanessa Horne said no evidence of anti-competitive or cartel-like behaviour had been found. "We thoroughly investigated the complaint and concluded that the banks had made their own, independent decisions. "We found no evidence of unlawful co-ordination between the banks or with the Net-Zero Banking Alliance, either relating to the banks joining or in meeting their obligations under this alliance." Federated Farmers alleged the five banks were co-ordinating their agricultural lending with Net-Zero Banking Alliance strategies which could violate the Commerce Act. It also alleged that this could make it harder for farmers to get loans and increase borrowing costs. Its banking spokesperson Mark Hooper called the Commission's decision disappointing but accepted it. "The reason we made the submission in the first place was that we felt there had been some collusion and there was a sort of collective agreement that would have limited farmers' choice. So in that sense we're disappointed, but we still think it was the right course of action to go down." Hooper said they remained concerned that banks were straying from their "core role of lending money based on real risk considerations and not indulging in the climate change space". The Net-Zero Banking Alliance is a United Nations (UN) initiative that guides banks to lead on climate mitigation in line with the goals of the Paris Agreement. Its website claims 127 banks worldwide have signed up, overseeing $74 trillion in total assets. In background information the Commission said the Alliance did not prescribe targets for signatories, gave a framework for target setting, and tools to assess the emissions within their portfolios and how to speed up lending towards low-carbon activity. Rural concerns about the reduction of lending to rural based petrol stations , prompted New Zealand First MP Andy Foster to pursue a private members' bill to prevent banks from refusing to lend for so-called "woke ideology" reasons. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Scoop
14 hours ago
- Scoop
Sounds Air Cut Flying Routes As Costs Surge
Sounds Air is cutting two regional services, saying it's facing 'out of control' costs despite strong bookings. The airline will no longer fly Blenheim to Christchurch or Christchurch to Wānaka from the end of September. That was after cancelling its services from Wellington to Taupo and Wellington to Westport last December and selling an aircraft. Sounds Air managing director Andrew Crawford told Nine to Noon aviation has been severely hit by escalating costs, supply chain challenges and a weak New Zealand dollar that was threatening the viability of all regional airlines. "In the last three months, we've had another half a million dollars of annual costs imposed on the business and at some point, you've just got to say 'no more. We just can't do it'," he said. Instead, the business will focus on its core regional services, selling its fleet of five Pilatus aircraft and expanding its Cessna Caravan fleet that operates in and around the Cook Strait. The decision will cost 10 staff their jobs across the Wānaka and Christchurch bases. Crawford said they were flying more passengers than ever but the costs were so high, engineers were difficult to find and keep, and they had exhausted all other options to make the business viable. Pre Covid, one of the avionic parts needed cost $28,000, but now the business was paying $70,000 for the same part. "How many seats do you have to sell on a nine seat aircraft to make that work? It's impossible." He acknowledged that people were already paying more for flights, saying fares had gone up more than 20 percent since Covid and they could go up another 20 percent and it still would not be enough. Another cost was the recent hike of the passenger service levy from the Civil Aviation Authority, which he said would cost the business close to $300,000 a year. "Where are we supposed to get that from? We've just got to pull that on the travelling public." They had reached out to the government numerous times to no avail, being told the business did not meet the criteria for the regional infrastructure fund months after being told to apply for it, he said. He was worried about the many regional people who used the flights to access healthcare and what they would do, Crawford said The change was a relief in some ways as the pressure on the business, staff and shareholders was extreme, he said. He was confident about the future of the business with its renewed focus on the Cook Strait, saying it was much more sustainable. "The numbers we're seeing are just astronomical. We used to do four flights a day in and out of Nelson, I think on Friday, we did 12. The demand is there, people are flying and these are cheaper aircraft to maintain."
Scoop
17 hours ago
- Scoop
ComCom Finds No Evidence Of Cartel Behaviour In Banks' Involvement In Net-Zero Banking Alliance
The Commerce Commission has investigated and found no evidence to support a complaint from Federated Farmers of New Zealand (Federated Farmers) alleging potentially anti-competitive, coordinated, cartel-like behaviour involving five major banks in New Zealand associated with the Net-Zero Banking Alliance. The banks involved are ANZ Bank New Zealand Limited (ANZ), ASB Bank Limited (ASB), Bank of New Zealand (BNZ), Rabobank New Zealand Limited (Rabobank), and Westpac New Zealand Limited (Westpac). These banks collectively account for around 97% of New Zealand's agricultural lending market. Commerce Commission General Manager Competition, Fair Trading and Credit Vanessa Horne says the complaint, received last December, alleged the banks were coordinating their agricultural lending policies to align with Net-Zero Banking Alliance strategies and targets. It alleged that, in doing so, the banks were potentially acting anti-competitively, in breach of the Commerce Act. The complaint also raised concerns that this alleged coordination could reduce farmers' access to capital, resulting in higher borrowing costs and stricter lending terms. 'We know New Zealanders are very focused on the work being done by the Commission (and others) to ensure banks are acting fairly - and farmers are no different,' says Ms Horne. 'If we see activity that falls foul of the laws we enforce, we will not hesitate to act. In this case, however, we thoroughly investigated the complaint and concluded that the banks had made their own, independent decisions. We found no evidence of unlawful coordination between the banks or with the Net-Zero Banking Alliance, either relating to the banks joining or in meeting their obligations under this alliance.' On that basis, the Commission says, it will be taking no further action. The Commission is keenly aware that, in many sectors, New Zealand businesses are working hard to develop and deliver sustainability initiatives together. New Zealand's competition laws can accommodate such collaboration - to help businesses, the Commission has developed Collaboration and Sustainability Guidelines that can be found on its website. Background The Net-Zero Banking Alliance The Net-Zero Banking Alliance is a United Nations (UN) convened initiative, supporting banks to lead on climate mitigation in line with the goals of the Paris Agreement. It was co-launched on 21 April 2021 by the United Nations Environment Programme (UNEP) Financial Initiative and the Prince of Wales Sustainable Markets Initiative Financial Services Taskforce, with 43 initial banks as signatories. Joining the Net-Zero Banking Alliance is entirely voluntary, and any signatory may join or withdraw at any time. Banks that choose to become signatories to this alliance make a public statement of an intention to align the greenhouse gas emissions from their lending and investment portfolios with net-zero pathways by 2050 or earlier. The Net-Zero Banking Alliance does not prescribe targets that signatories should set. Instead, it provides signatories with a framework for target setting, resources, global expertise, and tools to help them individually assess the emissions within their portfolios and understand ways that the shift of capital towards low-carbon activity might be accelerated.
