Surcharge savings called into question
Retailers have saved more than $70 million in credit-card interchange fees since 2009 - but consumers may not have received a cent, the Commerce Commission says.
Three years ago, the commission reached a settlement with banks and financial institutions which reduced the fees charged to merchants, and allowed them to surcharge customers.
A paper released by the competition watchdog this afternoon estimates that in the past three years, merchants have paid $70m less in fees than they otherwise would have.
However, the report also said it could not determine to what extent those savings were passed on to consumers.
The justification for surcharging is that it means customers who pay with cash or eftpos are not subsidising credit card users.
But critics have said it was impossible to say whether retailers had actually lowered their prices to compensate.
"It is very difficult to test empirically the degree to which merchants/retailers have passed cost savings through to customers," the report said.
At the same time, the commission has wrapped up an investigation into credit-card surcharging by Air New Zealand and cleared it of any wrongdoing.
It found the national carrier was not likely to have breached the Fair Trading Act, as the way it represented its credit-card fee was not false or misleading.
It also analysed the income generated and costs associated with card payments, and concluded the airline was not profiteering.
Commission chairman Mark Berry said: "If the fee was described as being for cost-recovery purposes, and was actually profit-generating, we would have concerns that consumers might be misled."
The commission's survey of retailers found the proportion now surcharging was relatively small.
Despite the lack of evidence on whether retailers simply pocketed the difference, Berry said the "user-pays" system benefited consumers.
As well as not penalising those using other payment methods, he said it gave retailers more bargaining power over their banks.
"That is, retailers may be able to negotiate lower fees, therefore making it unnecessary to surcharge at all."
The data the commission collected suggested that average levels of interchange fees could be starting to rise again.
Many of the merchants it spoke to were paying higher fees for accepting credit cards now than they were in 2009.
However, the commission said it would no longer be monitoring interchange fees. Any further action "would be best achieved under an alternative regulatory framework".