CMSPI’s response emphasizes the importance of regulating scheme fees and acquirer absorption alongside interchange, and protecting the local debit network.
The New Zealand government are currently considering regulation of the interchange fee component of the Merchant Service Charge (MSC) paid by merchants to accept card transactions, mirroring similar legislation seen in regions such as Europe, Australia, the U.S., and China. Interchange is paid via a merchant’s acquirer to the cardholder’s issuing bank, but its level is set by the international card networks. For large merchants, interchange can form 80% of the total cost of accepting card payments. CMSPI calculations suggest that New Zealand’s merchants could save $284 million NZD annually through implementing EU-style caps on interchange.
Although New Zealand’s domestic debit network, Eftpos, is essentially free for retailers, its use is declining; increasing use of online and contactless payment methods – neither of which are supported by the network – has allowed higher-cost networks such as Visa and Mastercard’s to grow their market share. In other regions, these networks have their interchange fees capped to limit costs for retailers. Although such intervention has generated significant savings for merchants globally, as outlined in CMSPI’s Global Interchange Report, it must include provisions addressing scheme fees and acquirer absorption to secure these benefits in the long-run.