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Under new legislation, Mastercard and Visa will be the initial focus of the New Zealand Commerce Commission’s work to encourage more competition and efficiency in the island’s retail payment system.
New Zealand’s consumer and markets authority has issued draft guidance for interchange fees on card networks following the implementation of the Retail Payment Systems Act.
The draft guidance is open for comment until October 6 and explains the obligations of network participants, particularly Visa and Mastercard, and issuers and acquirers within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 November 13 this year.
“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,” said John Small, associate commissioner at the authority.
Any submissions received will help to shape the final guidance, he said. “We welcome comments on our draft as well as identification of any additional guidance or information that network participants would find useful.”
The guidance also outlines the regulator’s interpretation of key provisions and the information necessary to assess compliance with the limits.
New Zealand’s legislation allows the commission to monitor the retail payment system and regulate designated retail payment networks — echoing similar legislation in Europe such as the Interchange Fee Regulation and the second Payment Services Directive (PSD2).
Mastercard and Visa have initially been designated by the act, which obligates the commission to regulate those networks to require greater transparency, determine how prices can be set, and allow other participants to access aspects of the network.
It sets pricing limits on the interchange fees charged by these two networks, and the commission will be responsible for monitoring and enforcing these pricing limits when they come into force.
In addition, the legislation grants the regulator the 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.
“We expect the November price limits on interchange fees will put downward pressure on the merchant fees paid by businesses,” said Small.
“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, he said. “As the cost of receiving payments comes down, we expect savings to be shared with consumers.”
