The Commerce Commission has released draft guidance explaining new interchange fee caps for Mastercard and Visa networks. The guidance will ultimately help participants in these networks comply with price limits on interchange fees which will come into effect in November. The draft guidance was developed following engagement with participants across the retail payment system.

Mastercard and Visa networks have been ‘designated’ by the Retail Payment System Act 2022 and as a consequence are subject to price limits on the interchange fees that are introduced by the Act. Interchange fees can be charged by card issuers within these networks for payment by those facilitating the use of the networks by merchants (acquirers). They are a significant part of merchant fees charged to businesses when consumers make payments using these networks. 

The draft guidance explains the obligations of network participants, particularly Visa and Mastercard, and issuers and acquirers within their networks, under the interchange fee limits when they come into effect on 13 November 2022. It outlines the Commission’s interpretation of key provisions and the information necessary to assess compliance with the limits.

Commissioner Dr John Small said “We expect participants of these networks to become familiar with the new rules and our guidance is intended to assist them to understand and give effect to their obligations. We expect them to implement any changes needed to comply with the new obligations. 

“Any submissions we receive will help to shape the final guidance and we welcome comment on our draft as well as identification of any additional guidance or information that network participants would find useful.

“We expect the November price limits on interchange fees will put downward pressure on the merchant fees paid by businesses. Assessing and enforcing compliance with these limits will be the first priority of the Commission’s work to promote competition and efficiency in the retail payment system.

“Any reduction in merchant fees will decrease the cost to businesses of accepting payments on these networks.  As the cost of receiving payments comes down, we expect savings to be shared with consumers. 

“To ensure that this happens, businesses should ensure any surcharging reflects the cost of providing a payment option. 

“If needed, the Commission is able to issue standards to require surcharges to be reflective of the actual cost to the business,” says Dr Small. 

The Commission welcomes submissions on the guidance until 6 October 2022. More information can be found on the Commission’s website here.

Editor's note

The Retail Payment Systems Act allows the Commission to monitor the retail payment system and regulate designated 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 operate networks which process debit and credit payments. Issuers on these networks issue cards and provide credit and/or debit facilities to consumers. Acquirers enable businesses to receive payments over these networks. Issuers and acquirers are often, but not exclusively, banks.

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