Credit card fees to be reined in
New rules to clamp down on fees for paying by credit card.
Fees passed on to consumers who pay by credit or debit card are expected to fall next year, with rules finally on the way to cap charges.
Commerce and Consumer Affairs Minister David Clark has announced the government will regulate merchant service fees.
These fees are charged by banks to businesses when customers use a credit or debit card to pay for products. They’re ultimately passed on to consumers at the checkout.
We’ve been calling for a clampdown on card fees, which are significantly higher here than in Australia.
Card fees generate revenue for banks and credit card companies but increase the cost of doing business for merchants and result in higher prices for consumers.
Lack of transparency about these fees also makes it difficult for consumers to pick the cheapest payment option.
A Retail Payments Systems Bill, to be introduced this year, will cap interchange fees, which are one of the main components of merchant service fees.
Interchange fees will be restricted to:
- 0.8% for credit card transactions
- 0.6% for online debit card payments
- 0.2% for contactless debit card payments.
For swiped and inserted debit card payments, there will be no interchange fee.
The government estimates the changes could save businesses $74 million annually.
The Commerce Commission will be responsible for monitoring fees and will have the power to take enforcement action against companies that fail to comply.
The rules are expected to come into effect next year.
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