NEW ZEALAND BUSINESS NEWS
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Businesses that let staff pay for work purchases on company credit cards will pay less to accept those cards from 22 April 2027. The Commerce Commission has capped the interchange fees charged on Mastercard and Visa commercial credit cards, adding to earlier limits it placed on personal cards.
Commercial credit cards are issued to a business rather than an individual, usually so employees can buy goods and services for work. They account for a small share of card transactions but a much larger share of the interchange fees that businesses pay through their merchant service fees.
Every time a customer pays with a Mastercard or Visa card, the business’s bank or payment provider, known as the acquirer, pays a small amount to the bank that issued the customer’s card. That payment is the interchange fee. In theory, it balances costs and benefits between the two sides of the card network and gives card issuers a revenue stream that helps fund card issuance, fraud prevention and losses, scheme fees, rewards, and digital wallets.
Businesses currently pay about $170 million a year in merchant service fees to accept Mastercard and Visa commercial credit card payments. Interchange fees make up about $125 million of that total. The commission expects the new caps, taken together with the earlier cuts on personal cards, to reduce business costs by around $290 million each year.
The commission’s concern is who pays for the perks attached to commercial cards. Cardholders typically get loyalty programmes, expense reporting, and interest-free credit, and the cost of providing those benefits is recovered through interchange fees charged to the business accepting the card.
Those costs then feed into retail prices, so the commission argues that everyone pays for benefits only some cardholders receive. The commission calls that arrangement inefficient and says capping the fees makes it more reasonable to accept Mastercard and Visa cards.
The commission also expects the caps to push card issuers, including banks, to look harder at supporting other ways to pay. In its view, more competition and new technology in the payments market would drive innovation, value, and choice for businesses and consumers, and over time produce a fairer, more efficient payments system.
The caps take effect on 22 April 2027. Until then, the fees businesses pay are unchanged. The commission advises businesses to review their merchant service fee arrangements and talk to their payment service providers about how the new caps will affect their costs.
For a business whose staff use commercial cards heavily, that conversation is worth having before the change lands. Merchant service fees are set by the provider, not the card networks alone, so any savings will depend on the arrangement each business has negotiated and how the provider passes the lower interchange through.
Businesses that accept few commercial cards will see little difference. The commission notes that commercial cards make up a small slice of transaction volumes, which is why the caps are expected to matter most to companies that issue cards to many employees.
The commercial card caps sit alongside the earlier limits on personal card interchange, and the commission frames both as steps towards a payments system that costs businesses less to run. The $290 million annual figure reflects the combined effect of both sets of caps.
Card payments are only one way businesses get paid, and the commission has signalled that it wants to see alternatives become more viable. Whether that happens will depend on how quickly payment providers bring new options to market and how readily businesses take them up.
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