Businesses tipped to save $105m annually due to reduction in payment fees

By earthnews
1 year Ago

Businesses tipped to save $105m annually due to reduction in payment fees

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It is forecast that businesses will save $105m a year as a result of a reduction in contactless and credit card fees.
Photo: 123rf

The Commerce Commission expects merchants to pass on an estimated $105 million a year in savings on Mastercard and Visa card fees charged to consumers or will consider further regulation.

Regulation capping the interchange fees on contactless and credit cards, introduced last November, were now expected to deliver much bigger savings to merchants than the $74m initial estimates.

Commission chairperson John Small said the 40 percent increase in anticipated savings should eventually flow through to consumers, or it would consider further regulation.

Interchange fees were a significant component of the fees businesses pay to accept credit cards and online or contactless debit cards payments on Mastercard and Visa networks.

“Our data to date shows that businesses will save an estimated $105m each year – more than 40 percent above the $74m predicted in May 2022,” Small said.

“These should be ongoing savings in what businesses – including retailers like restaurants, your local hairdresser, dairy and café, who make up most businesses in the country – are charged by their payment provider, and we will be watching for what we expect to see in these businesses sharing this benefit with their consumers.

“We do have the power to regulate if necessary. We haven’t really decided that’s necessary, but if it turns out to be that that’s the only way, then we’ll do that.”

Interchange fees were paid between payment service providers, usually banks, with the costs passed to businesses as part of their merchant service fee.

Small said payment providers needed to do more to make information on their fees clear and transparent so businesses could make informed and confident decisions about what provider and plan was right for them.