Commerce and Consumer Affairs Minister David Clark has today announced the Government’s next steps to reduce merchant service fees that banks charge businesses when customers use a credit or debit card to pay, which is estimated to save New Zealand businesses approximately $74 million each year.
“Pre-Covid, Eftpos has been the main way Kiwis pay for goods and services, and this is fees-free for retailers. Increasingly, however, consumers are favouring contactless debit and credit cards,” Clark said.
“The high cost of these fees puts added financial pressure on businesses at a time when they are dealing with the economic impacts of Covid-19 “Reducing the merchant service fees that New Zealand businesses are being charged is a priority for this Government, and critical to the recovery of the economy.
“Currently unregulated, New Zealand’s merchant service fees are set much higher than they are in Australia and add significant overhead for retailers, who often pass those costs onto consumers through higher prices.”
Following feedback from a recent consultation period, a Retail Payments Systems Bill will be introduced later this year to:
· require reductions in interchange fees as soon as possible
· enable direct intervention by the Commerce Commission using a broad suite of powers to regulate different participants in the retail payment system
· introduce a disclosure and reporting requirement to enable the Commerce Commission to monitor the retail payments system.
“One of the main components of merchant service fees is the interchange fee. We will cap those for credit card transactions at 0.8 per cent, which is in line with Australia,” Clark said.
“We’re also capping the interchange fees charged for online debit card transactions at 0.6 per cent. Contactless debit card interchange fees will stay at their current levels of 0.2 per cent or less, and for swiped and inserted debit, it will stay at 0 per cent.”
“The new regulatory regime is estimated to result in savings of approximately $74m each year for New Zealand merchants. Smaller retailers, and those who rely on credit or online sales will particularly benefit from these savings,” Clark said.
The Government aims to seek final policy decisions on reducing merchant fees in mid-2021, with a view to the full regulatory regime coming into effect next year.