Under the new Retail Payment Systems Act 2022, the Mastercard and Visa credit and debit card networks will be the initial focus of the Commerce Commission’s work to promote competition and efficiency in the retail payment system.

The Act allows the Commission 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.

The Mastercard and Visa credit and debit networks have initially been ‘designated’ by the Act – which allows the Commission to regulate those networks to require greater transparency, determine how prices can be set or expressed, and allow other participants to access aspects of the network.

The Act sets pricing limits on the interchange fees charged by these two networks. Interchange fees are generally the largest component of the fees charged to businesses when consumers make certain types of payments. The Commission will be responsible for monitoring and enforcing these pricing limits when they come into force on 13 November 2022, six months after the Act came into force.

In addition, the Act gives the Commission power to issue merchant surcharging standards for any network to require consumer surcharges for payment services such as credit cards or contactless payments to be appropriate.

Commission Chair Anna Rawlings said, “A well-functioning retail payment system will provide long-term benefits for business and consumers.”

“Price limits on interchange fees will put downward pressure on the merchant fees paid by businesses and ultimately the charges paid by consumers, and the first priority of the Commission will be to monitor and enforce these limits.

“We expect the limits on interchange fees will have an impact on surcharges that consumers pay for some Mastercard and Visa payments. If needed, the Commission will be able to issue standards to require that surcharges charged by businesses reflect the actual cost of providing that payment option.”

As well as tools to regulate designated networks, the Act also gives the Commission powers to monitor the wider retail payment system. This includes networks such as bank transfer networks and digital wallet networks.

If the Commission, through its monitoring identifies areas in other retail payment networks that could be more competitive or efficient, it can make a recommendation to the Minister to ‘designate’ those networks.

“As this is a new role for us, we will be working with network participants, merchants and consumers over the coming months to better understand the retail payment system and how it works. This will help inform where to focus our monitoring efforts to deliver long-term benefits for consumers and merchants,” says Ms Rawlings.

The Commission has established a new team in the Market Regulation branch to carry out the Commission’s responsibilities under the Act.

More information can be found on the Commission’s website here. Links to the Act and more information on the background to the legislation can be found on the Ministry of Business, Innovation and Employment website.

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