Retail payment system

The retail payment system performs a critical function for the New Zealand economy for businesses and consumers alike. Every time anyone buys something, gets paid, transfers money or uses an ATM, they are using the retail payment system. It is the most commonly used financial service in Aotearoa New Zealand.

The retail payment system is made up of multiple payment networks – including debit and credit card networks, bank transfer networks, digital wallet networks and buy now, pay later networks.

The role of the Commission

The Retail Payment System Act 2022 (the Act) enables us to monitor the retail payment system, and regulate designated retail payment networks, for the long-term benefit of New Zealand businesses and consumers who rely on it every day to buy and sell goods and services.

Visa and Mastercard networks have initially been categorised as ‘designated networks’ by the Act. Where a network is designated, this means the Commission has powers to:

• determine how prices can be set or expressed – an ‘initial pricing standard’ has already been set under the Act that limits ‘interchange fees’
• require greater transparency of certain information
• allow other participants to access aspects of the network.

We also have powers to issue merchant surcharging standards for any network to ensure surcharges for payment services such as credit cards or contactless payments reflect the actual cost of providing that payment option.

Recommendation to the Minister of Commerce and Consumer Affairs to designate the interbank payment network

We want consumers and businesses to benefit from new ways to pay between bank accounts for online and in-person payments.

On 20 August 2024 we published our recommendation to the Hon. Andrew Bayly, Minister of Commerce and Consumer Affairs, to designate the interbank payment network under the Retail Payment System Act. We also published a statement of our reasons in support of our recommendation.

If the interbank payment network is designated it will enable us to use all of the tools available to help deliver new payment options that are likely to be more secure, more convenient and reduce costs for businesses and consumers.

The ‘Recommendation to designate the interbank payment network’ and ‘Our reasons to support our recommendation to the Minister’ papers can be found below, alongside the submissions received earlier in the year and the consultation with the Reserve Bank of New Zealand required under the Retail Payment System Act.

We have also published Payments NZ’s letter in response to our open letter that was published on 22 February 2024.

Interchange fees

‘Interchange fees’ are a significant component of the fees businesses pay to accept payments on the Mastercard and Visa networks. These fees are paid between payment service providers (usually banks) and are a cost that is passed to businesses as part of their merchant service fee for accepting credit cards and online or contactless debit cards that use these networks.

The initial pricing standard (IPS) for the Mastercard and Visa credit and debit networks came into force on 13 November 2022. The IPS limits the interchange fee for certain credit and debit transactions.

On 15 December 2022, we published guidance on the IPS. The guidance explains the obligations of network participants, particularly Mastercard, Visa, and issuers and acquirers within their networks, under the interchange fee limits.

To complement the guidance, on 2 May 2023, we published a paper which describes the information we consider relevant to assess whether the IPS is being complied with and explains our approach to monitoring compliance with the standard.

On 23 July 2024 we published a consultation paper on a number of pricing and access issues that we have identified through our monitoring work, with a focus on the fees paid by New Zealand businesses to accept card payments and the flow through to surcharges paid by consumers. The paper is available here.

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