New Zealand’s Commerce Commission is proposing a new cap on interchange fees, something which could save up to $40 million each year.

The regulator says that businesses across the country pay around $125 million each year in fees to accept Mastercard and Visa commercial credit cards, a rate that it says has an impact on retail prices.

“We expect our proposed interchange fee caps would reduce costs for businesses by $40m annually,” commissioner Bryan Chapple said.

“The current level of interchange fees for commercial credit cards sees businesses paying high costs to fund cardholder benefits like loyalty programmes, insurance, and interest-free periods.”

It comes after previous moves to lower such fees on personal cards. Once those take effect, they are estimated to save businesses up to $290 million each year. 

But the new proposals are the first attempt to reduce fees on commercial cards, which make up a smaller percentage of transactions, but a disproportionately larger share of interchange fees, according to the commission.

“We understand these benefits are important for some cardholders, but they shouldn’t be paid for through interchange fees. These fees ultimately flow through to retail prices, where everyone pays for benefits only some people receive,” Chapple added.

“We don’t think the corner dairy should be forced to absorb additional costs or increase their prices to cover the costs of rewards and benefits that only those with commercial credit cards get.”

Chapple said it expects that, over time, the changes will support better competition among payment methods, improve incentives, and lower costs.