NZ financial institutions in the High Court
(7 October 2009 – New Zealand) Seven New Zealand financial institutions have reached separate agreements with The Commerce Commission following claims they breached the Commerce Act.
The Commission claimed in the High Court proceedings that the parties had breached the Act implementing the Visa and MasterCard credit scheme rules in New Zealand.
In the scheme that was challenged by the commission, the retailer or service provider that has incurred the interchange fee is not allowed to recover the fee from the cardholder.
This encouraged the retailer to average out the cost of the fees across all of their sales, across all payment methods, increasing the cost of every item or service sold by businesses which accept Visa or MasterCard.
The Commission alleged that this substantially lessened competition by artificially inflating the cost to retailers of accepting credit cards and ultimately raising prices paid by all consumers.
The companies that have reached agreements with the Commerce Commission are ANZ, ASB, Bank of New Zealand, National, Kiwibank/New Zealand Post, National Bank, TSB Bank, The Warehouse Financial Services Limited and Westpac New Zealand Ltd.
Visa and MasterCard have also reached agreements with the commission, paving the way for interchange fees in New Zealand to be set by competition.
The decision was made to put immediate downward pressure on interchange fees while ensuring that those fees remain transparent and open to competitive forces in the future.
The Commission expects the savings to retailers over the next three years as a result of these settlements to be in the order of NZ$70 to NZ$80 million said Commerce Commission chair, Dr Mark Berry.
He added, that this represents a significant reduction in the cost of doing business for retailers who offer credit card payment options, and the Commission would expect to see this passed on to consumers over time through lower retail prices.
In the scheme that was challenged by the commission, the retailer or service provider that has incurred the interchange fee is not allowed to recover the fee from the cardholder.
This encouraged the retailer to average out the cost of the fees across all of their sales, across all payment methods, increasing the cost of every item or service sold by businesses which accept Visa or MasterCard.
The Commission alleged that this substantially lessened competition by artificially inflating the cost to retailers of accepting credit cards and ultimately raising prices paid by all consumers.
The companies that have reached agreements with the Commerce Commission are ANZ, ASB, Bank of New Zealand, National, Kiwibank/New Zealand Post, National Bank, TSB Bank, The Warehouse Financial Services Limited and Westpac New Zealand Ltd.
Visa and MasterCard have also reached agreements with the commission, paving the way for interchange fees in New Zealand to be set by competition.
The decision was made to put immediate downward pressure on interchange fees while ensuring that those fees remain transparent and open to competitive forces in the future.
The Commission expects the savings to retailers over the next three years as a result of these settlements to be in the order of NZ$70 to NZ$80 million said Commerce Commission chair, Dr Mark Berry.
He added, that this represents a significant reduction in the cost of doing business for retailers who offer credit card payment options, and the Commission would expect to see this passed on to consumers over time through lower retail prices.
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