1 00:00:00,160 --> 00:00:03,320 Speaker 1: Right now, MasterCard is pushing back at the Commerce Commission's 2 00:00:03,360 --> 00:00:05,920 Speaker 1: plans to put a cap on some credit card fees. 3 00:00:06,360 --> 00:00:09,360 Speaker 1: Interchange fees are one part of a bunch of charges 4 00:00:09,400 --> 00:00:12,039 Speaker 1: that the retailers pay, and the Commerce Commission wants to 5 00:00:12,119 --> 00:00:14,600 Speaker 1: reduce those fees by about two hundred and eighty million 6 00:00:14,640 --> 00:00:16,639 Speaker 1: dollars a year by introducing a cap on them. But 7 00:00:16,680 --> 00:00:19,840 Speaker 1: the Commerce Commission says it can't guarantee that the full 8 00:00:19,920 --> 00:00:22,279 Speaker 1: two hundred and eighty mil will actually be passed on 9 00:00:22,320 --> 00:00:26,120 Speaker 1: to consumers. Ruth Verviea is Mastercard's country manager. Ruth, Hello, 10 00:00:27,480 --> 00:00:29,360 Speaker 1: Hi Ryan, how are you doing good? Thank you, thanks 11 00:00:29,360 --> 00:00:33,120 Speaker 1: for coming on the program. So these charges, the interchange fee, 12 00:00:33,479 --> 00:00:37,040 Speaker 1: do you make a profit off the interchange feepe? 13 00:00:37,040 --> 00:00:40,960 Speaker 2: So MasterCard doesn't make any money from interchange. Interchange is 14 00:00:41,000 --> 00:00:45,240 Speaker 2: a really important balancing mechanism for the payments this ecosystem 15 00:00:45,400 --> 00:00:51,120 Speaker 2: that allows continued investment in experience, in technology, and in 16 00:00:51,159 --> 00:00:52,280 Speaker 2: safety and security. 17 00:00:52,520 --> 00:00:56,120 Speaker 1: So the interchange fee is a charge that you use 18 00:00:56,440 --> 00:00:59,880 Speaker 1: for R and D basically, so it's what. 19 00:00:59,760 --> 00:01:03,360 Speaker 2: Our partners use for that. So it's paid by the 20 00:01:03,400 --> 00:01:08,360 Speaker 2: merchants bank to the card issuers, to the cardholder's bank 21 00:01:09,000 --> 00:01:13,160 Speaker 2: and so it balances that the cost of issuing the 22 00:01:13,200 --> 00:01:18,520 Speaker 2: payment credential with the benefit that the merchant receives from 23 00:01:18,800 --> 00:01:20,120 Speaker 2: accepting that payment. 24 00:01:20,280 --> 00:01:22,080 Speaker 1: So who profits off the interchange fee? 25 00:01:23,640 --> 00:01:27,440 Speaker 2: So the person who issues the card or issues the 26 00:01:27,480 --> 00:01:33,080 Speaker 2: credential gets that money, and that's experience. 27 00:01:33,840 --> 00:01:34,959 Speaker 1: That's you, right, master Card. 28 00:01:36,200 --> 00:01:38,720 Speaker 2: So we don't issue any cards that would be your bank, 29 00:01:38,840 --> 00:01:42,160 Speaker 2: or that would be a fintech so or that would 30 00:01:42,160 --> 00:01:46,000 Speaker 2: be a credit card company. Those would be the people 31 00:01:46,040 --> 00:01:49,040 Speaker 2: who receive that revenue and then they would invest that 32 00:01:49,720 --> 00:01:51,360 Speaker 2: in a card proposition. 33 00:01:51,720 --> 00:01:53,960 Speaker 1: So why have you got a problem with the interchange 34 00:01:54,000 --> 00:01:59,360 Speaker 1: fees being kept by the It's suggested by the ComCom. 35 00:01:58,120 --> 00:02:01,000 Speaker 2: Because we think it's a really important mechanism in a 36 00:02:01,080 --> 00:02:06,080 Speaker 2: market to allow for continued innovation, continued investment in safety 37 00:02:06,080 --> 00:02:12,079 Speaker 2: and security, continued investment in experience. And what the Commerce 38 00:02:12,080 --> 00:02:15,480 Speaker 2: Commission is suggesting is hollowing that out, and that will 39 00:02:15,520 --> 00:02:19,440 Speaker 2: make the business case for investing in new products and 40 00:02:19,480 --> 00:02:22,320 Speaker 2: services much harder. It will make the business case for 41 00:02:22,400 --> 00:02:25,480 Speaker 2: investing in new payment types like open banking much harder. 42 00:02:26,320 --> 00:02:29,880 Speaker 2: So we're really clear that there's these unintended consequences of 43 00:02:29,919 --> 00:02:31,040 Speaker 2: what's being proposed. 44 00:02:31,400 --> 00:02:35,280 Speaker 1: How does MasterCard make money off transactions. You know, when 45 00:02:35,320 --> 00:02:38,160 Speaker 1: I go to the deary and swipe my card, where 46 00:02:38,200 --> 00:02:39,400 Speaker 1: are you making your cut? 47 00:02:40,639 --> 00:02:44,000 Speaker 2: Yeah, so we make money as the transaction is processed 48 00:02:44,040 --> 00:02:47,440 Speaker 2: by our network, and that's separate to interchange fees. 49 00:02:47,639 --> 00:02:50,440 Speaker 1: It's a surcharge, Ryan, So. 50 00:02:50,600 --> 00:02:56,160 Speaker 2: Surcharge is what a what a merchant would would charge 51 00:02:57,000 --> 00:03:00,280 Speaker 2: the person making the payment for that payment, some of 52 00:03:00,280 --> 00:03:03,880 Speaker 2: that would be used to cover interchange and scheme fees 53 00:03:03,960 --> 00:03:07,280 Speaker 2: and the fees from the bank of the merchant. 54 00:03:07,720 --> 00:03:11,080 Speaker 1: Right, So your fee that you tack on, what's your fee? 55 00:03:11,080 --> 00:03:12,600 Speaker 1: If you know, if I went and bought a can 56 00:03:12,600 --> 00:03:14,639 Speaker 1: of coke or something, what does master Card get. 57 00:03:15,880 --> 00:03:19,440 Speaker 2: Yeah, it's a really small proportion of the overall cost 58 00:03:19,720 --> 00:03:23,120 Speaker 2: for a merchant. So it would be, you know, a 59 00:03:23,120 --> 00:03:27,239 Speaker 2: fraction of what that interchange component would be or the 60 00:03:27,680 --> 00:03:31,600 Speaker 2: fee that the retailer's bank would be charging. 61 00:03:32,000 --> 00:03:34,120 Speaker 1: So it's a fraction of the interchange fee. So you 62 00:03:34,520 --> 00:03:36,240 Speaker 1: do get some of the interchange fee. 63 00:03:37,120 --> 00:03:39,760 Speaker 2: No, sorry, I just meant proportionally, so we don't get 64 00:03:40,000 --> 00:03:41,320 Speaker 2: do you know what is the fraction? 65 00:03:41,400 --> 00:03:41,680 Speaker 1: Do you know? 66 00:03:42,880 --> 00:03:45,960 Speaker 2: It would vary based on based on the transaction, as 67 00:03:46,000 --> 00:03:51,040 Speaker 2: a percentage, a small percentage. 68 00:03:51,120 --> 00:03:55,680 Speaker 1: One, two percent, zero point three under ten percent, under 69 00:03:55,720 --> 00:03:59,800 Speaker 1: ten percent. That's that's quite a lot. I mean that 70 00:03:59,800 --> 00:04:02,360 Speaker 1: that that range is big. Do you mean up to 71 00:04:02,400 --> 00:04:05,680 Speaker 1: ten percent of the overall fees that are charged or 72 00:04:05,720 --> 00:04:07,160 Speaker 1: do you mean up to ten percent of the cost 73 00:04:07,200 --> 00:04:07,600 Speaker 1: of the good? 74 00:04:09,440 --> 00:04:15,360 Speaker 2: No? No, no, no sorry no, not of the total good, 75 00:04:15,360 --> 00:04:20,520 Speaker 2: of the total overall costs that might be paid. It's 76 00:04:20,520 --> 00:04:24,000 Speaker 2: a very small proportion of the overall costs. 77 00:04:23,839 --> 00:04:27,240 Speaker 1: Right, So up to ten percent of the fees that 78 00:04:27,279 --> 00:04:32,480 Speaker 1: we pay for using cards at shops for the convenience. Yeah, okay, 79 00:04:33,960 --> 00:04:36,840 Speaker 1: So the Commerce Commission seems kind of hell bent on 80 00:04:36,920 --> 00:04:40,640 Speaker 1: doing this, making this change, and they have kept it 81 00:04:40,680 --> 00:04:44,000 Speaker 1: once before. What do you think the effect will be? 82 00:04:44,040 --> 00:04:47,839 Speaker 1: Will we actually get cheaper? Will it make transactions cheaper 83 00:04:47,880 --> 00:04:49,080 Speaker 1: for us as consumers? 84 00:04:50,480 --> 00:04:53,240 Speaker 2: We haven't seen that play out in any other market. 85 00:04:53,360 --> 00:04:57,280 Speaker 2: And what the Commerce Commission said was that by tapping 86 00:04:57,279 --> 00:05:01,200 Speaker 2: into change fees excuse me, surcharges would come down. And 87 00:05:01,800 --> 00:05:05,039 Speaker 2: they kept interchange or they brought interchange down two years ago. 88 00:05:05,360 --> 00:05:07,520 Speaker 2: And I think you speak to any key we and 89 00:05:07,560 --> 00:05:11,520 Speaker 2: they would say that surcharging has not gone down. So 90 00:05:11,600 --> 00:05:15,159 Speaker 2: it's really clear that surcharging won't come down as a 91 00:05:15,200 --> 00:05:20,440 Speaker 2: result of capping interchange. So what I think we can see, 92 00:05:20,480 --> 00:05:22,960 Speaker 2: what you can expect to see as a consumer or 93 00:05:23,000 --> 00:05:27,200 Speaker 2: as a card holder, is that you'll be surcharged more often, 94 00:05:28,279 --> 00:05:32,880 Speaker 2: and that by taking away this amount of interchange, which 95 00:05:33,000 --> 00:05:36,159 Speaker 2: as we've said, is a balancing mechanism between the two 96 00:05:36,200 --> 00:05:39,960 Speaker 2: sides of the ecosystem, consumers will pay for that in 97 00:05:40,000 --> 00:05:42,440 Speaker 2: other ways because that investment will still need to be made. 98 00:05:43,360 --> 00:05:45,640 Speaker 1: Seems like we always pay for everything, doesn't that. Thank 99 00:05:45,680 --> 00:05:49,360 Speaker 1: you very much for that. That's Ruth Master Cards Country Manager. 100 00:05:50,560 --> 00:05:54,000 Speaker 1: For more from Hither Duplessylan Drive, listen live to news 101 00:05:54,080 --> 00:05:56,960 Speaker 1: talks it'd be from four pm weekdays, or follow the 102 00:05:57,000 --> 00:05:58,680 Speaker 1: podcast on iHeartRadio.