Their move follows the recent decision by the Commerce Commission to bring its own court proceedings over the alleged price fixing of interchange fees by the institutions.
The retail parties are Foodstuffs, Progressive Enterprises, Dick Smith Electronics, Farmers, Noel Leeming, Whitcoulls and Mississippi.
In a statement of claim filed in the Wellington High Court, they allege that the fixing of interchange fees is anti-competitive and should not be allowed to continue.
The group is also requesting that the court award damages to reflect the losses they have incurred as a result of the breaches of the Commerce Act and compensate for alleged over-payment of fees
If successful, the legal actions brought by the commission and the retail group will enable all retailers to reduce their cost of operations to the benefit of their customers.
John Albertson, NZ Retailers Association CEO said credit card fees cost NZ consumers and businesses more than $A300 million annually.
The separate actions brought by the Commerce Commission and the retail group follows recent regulatory action by the Reserve Bank of Australia in relation to interchange fees and the scrutiny of such fees in a number of other jurisdictions around the world.
The Commerce Commission filed High Court proceedings against MasterCard and Visa, as well as 11 banks and finance companies which are their customers, claiming the companies were anti-competitive in setting interchange fees of up to 1.8% on each transaction.
The retailer is charged the fee, but cannot recover it directly from cardholders so is left to raise prices across the board to recoup the costs, leaving customers who paid by cash or eftpos to subsidise credit card users.
The action follows similar investigations into the size of the fee in Australia, Britain and the US.
The commission proceedings are against Visa International and MasterCard International, as well as Cards NZ, ASB, BNZ, Westpac NZ, ANZ, TSB, Kiwibank, HSBC, NZ Post, The Warehouse Financial Services and GE Finance and Insurance.
Visa and MasterCard, said they would contest the charges.
Albertson said Australia’s fees were now less than half those in NZ, after the Australia Reserve Bank regulated for the fees to drop from 0.95% to 0.5% of the transaction.
NZ retailers pay the fee but are not allowed to charge customers extra to pay by credit cards, so the cost was passed on in price increases to all customers, including those who paid by cash or eftpos.
MasterCard Australasia said the commission’s action did not reflect the vigorous competition that existed between different payment systems in NZ. It said MasterCard operated in the best interests of its cardholders and merchants. Visa also said its payment system benefited cardholders.
Meanwhile David Tripe, director of banking studies at NZ’s Massey University, has warned that customer loyalty reward programs could be a casualty of any clampdown on the fee.
Penalties for price fixing in NZ’s Commerce Act are up to $10 million per breach or 10% of the company’s turnover. IRW