Retail Payment System Bill passes third reading

16 May 2022

The Retail Payment System Bill, which introduces various measures intended to support small businesses, passed its third reading on 11 May 2022. 

In welcoming the passage of the Bill, the Minister of Commerce and Consumer Affairs, David Clark, described the measures as relieving a “disproportionate burden” on merchants.

Key Changes under the Bill

As noted in our earlier update, the Bill introduces three key changes:

  • It provides for ‘designation’ of specific retail payment networks for regulation under the new regime. As an ‘initial designation’ the Bill provides that MasterCard and Visa credit and debit card networks will be designated.
  • It sets an ‘initial pricing standard’ that requires reductions in interchange fees for transactions on the MasterCard and Visa networks. Interchange fees are a major component of merchant service fees (i.e. fees paid by merchants to their acquirer bank when their customers make credit or debit card payments).
  • The Bill also confers various functions and powers on the Commerce Commission (some of which apply to designated networks only, while others apply to all retail payment networks). These include new powers to issue merchant surcharging standards to prevent merchants from passing on excessive surcharges to consumers, and supervisory powers to monitor, investigate and enforce those standards.

Those key measures remained substantially unchanged following the Select Committee report, issued on 8 March 2022. The changes to the Bill were relatively nuanced and included:

  • Requiring the Commerce Commission to consult with network operators and affected persons before making any recommendations that a retail payment network be designated, and before issuing network standards, directions, or merchant surcharging standards.
  • Clarifying that merchant surcharges for payment services should be “no more than the cost to the merchant” for accepting that retail payment (replacing a previous draft restriction on ‘excessive’ fees, which the Committee considered too subjective).
  • Expanding the Commission’s investigative powers so that (in addition to overseeing designated networks and network standards) the Commission would also be able to use its information-gathering powers in relation to merchant surcharging standards.
  • A new definition of 'commercial credit payment products' (which are excluded from the Initial Pricing Standard) as credit products issued to businesses for use “wholly for purposes other than personal, domestic, or household purposes, and that is charged directly to the account of the business.”

The Bill forms part of broader measures introduced by the government to protect small businesses.  Those measures also include Unfair Contract Terms protections for small trade contracts, which come into force this August (summarised here).


The Bill will come into force the day after it receives Royal Assent (expected shortly), and the Initial Pricing Standard will come into force 6 months after that.  In welcoming the passage of the Bill, the Minister described the changes as representing “direct and immediate steps” to reduce merchant service fees. Network operators and card issuers will need to make the most of the short window available, to prepare for the changes ahead and ensure their interchange fees comply with the new standards. 

If you would like further details on the changes, or would like to korero about how these changes may impact your business, please get in touch with the authors or your usual Bell Gully adviser.

Disclaimer: This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.