New Zealand Settlement With MasterCard on Interchange Fees Welcomed by Retail Industry 

Today the Retail Industry Leaders Association (RILA) welcomed the announcement by New Zealand’s Commerce Commission that it has reached a settlement with MasterCard related to interchange fees paid by New Zealand consumers and retailers.  The action comes nearly two weeks after a similar settlement was reached between New Zealand’s Commerce Commission and Visa on substantially the same issues. 

Interchange fees, which are imposed by the card association and issuing banks to process the credit and debit card transactions, have tripled in the United States since 2001 to $48 billion last year and amount to a hidden tax on consumers. These “swipe fees” are charged to every retailer, small or large, for every credit and debit transaction processed. 

In today’s complex marketplace where business costs are commonly negotiated, interchange rates stand out. Retailers are powerless to negotiate these fees, and accordingly, they have skyrocketed while other transaction costs have decreased. Interchange rates are particularly harmful to small businesses which often face higher rates than larger businesses. 

“We are pleased to see New Zealand’s competition authority taking aggressive action against credit card giants, MasterCard and Visa. Their action will bolster competition in the credit and debit card markets and provide relief to consumers and retailers,” said John Emling, senior vice president for government affairs.  “The only question now is; why won’t Visa and MasterCard give the same deal to U.S. consumers?”

New Zealand’s competition authority has reached the same conclusion as other regulators around world have: that interchange fees and the rules that accompany credit and debit card acceptance are bad for consumers and businesses.   Interchange fees average between 2%-3% of every transaction.

In addition to New Zealand, countries around the world, including Canada, the European Union, and Australia, have come to the conclusion that hidden interchange fees are excessive, are set in an anticompetitive fashion, and obscure the real costs associated with debit and credit card usage.

“Unfortunately this good news does nothing for U.S. consumers and retailers, who continue to pay among the highest swipe fees in the world,” added Emling.  “It’s time that American consumers and American businesses of all sizes see some relief on interchange fees that have spiraled out of control.”

Legislative proposals under consideration in the United States addressing interchange fees include the Credit Card Fair Fee Act (H.R. 2695/S. 1212), which would allow retailers to negotiate interchange fees, and the Credit Card Interchange Fees Act (H.R. 2382), which would bring transparency and competition to interchange rates. In addition, Congress will turn its attention this fall toward broader regulatory reform of our financial system.

The Retail Industry Leaders Association (RILA) is the trade association of the world’s largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and operate more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.

###