Credit and debit card networks Mastercard and Visa are on notice they will be the first to face Commerce Commission scrutiny under the new Retail Payment Systems Act 2022 which passed into law last week.

The Act includes a range of measures to encourage competition and efficiency in New Zealand’s retail payment system, promising what the government says will be long-term benefits to consumers, businesses and merchants. 

Under the Act, the commission will monitor the retail payment system and regulate designated retail payment networks. Today, the commission issued a statement saying the Mastercard and Visa credit and debit card networks will be its initial focus. The new law gives the commission the power to require greater transparency, determine how prices can be set or expressed, and allow other participants to access parts of the network.

Pricing limits on the interchange fees charged by these two networks have been set with those fees generally being the largest component of card fees charged to businesses when consumers make certain types of card payments either online or instore. However these limits do not take effect until November 13, six months after the law was enacted. 

The Act also gives the commission powers to monitor the wider retail payment system, including bank transfer networks and digital wallet networks. If the commission identified other retail payment networks in which there are opportunities to improve competition or efficiencies, it can recommend the responsible government minister designates those networks for further regulation. 

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

“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.” 

The commission has set up a new team within its market regulation branch to carry out its new responsibilities under the new law.