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. The proposed changes are 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,” David 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.
“This is a very welcome decision for the hospitality industry. Regulation on merchant fees is something we have lobbied hard for so we are happy to see that the government is listening.” said Restaurant Association CEO Marisa Bidois
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.
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.
Merchant card fees have been on the increase since contactless payments have come into more general use. These fees have been costing our businesses thousands each year.
In a survey of Restaurant Association members conducted earlier this year, 69 per cent of respondents said they would like to see government regulation to reduce merchant service fees
Just under 90% of our members believe that the current merchant fee system needs to change. We still experience higher prices in New Zealand than in Australia and the United Kingdom and pay nearly twice as much as Australian retailers pay in merchant fees. On average, we understand it is estimated to be $13,000 per year more than Australian counterparts.
“With contactless payment increases over the past year, these fees have
become incredibly difficult for our businesses to manage. Bringing transparency
to merchant fees will serve hospitality businesses far better over the long
term than allowing a hands-off approach to continue.”