In November 2021 the Restaurant Association of New Zealand (the Association) made a submission to the Economic Development, Science and Innovation Committee on the Retail Payment System Bill.
The Association supports the effort to ensure New Zealand’s retail payment systems are equitable and promote long term economic growth for business owners across Aotearoa, particularly those in the hospitality sector who now face a steep road to economic recovery. As noted in the Association’s submission in response to the Regulating to reduce Merchant Service Fees consultation (Merchant Service Fees consultation), submitted to the Ministry of Business, Employment and Innovation (MBIE), 99.26% of our members either agreed or strongly agreed merchant fees should be regulated and 69% of them indicated they would prefer direct regulation.
The Association commends the Government for taking this much needed step in ensuring equitable competitive conditions for business, particularly for small businesses, noting the majority of hospitality outlets are.
Well before the pandemic, the prominence of contact debit cards and online transactions had increased. Merchants of all sizes have largely had to absorb these costs, particularly smaller businesses who do not possess the bargaining power to negotiate lower fees. These costs were further compounded as businesses were faced with no other choice but to adopt contactless payments due to public health concerns while dealing with the debilitating financial pressures brought upon by COVID-19.
In an Association Member Survey, Feedback on the Retail Payment System Bill, conducted for the purpose of this submission and carried out in November 2021, 86% of Members indicated that they adopted contactless payment methods due to customer demands. These demands have increased over the past 20 months due to the requirements for operating within the Alert Level framework.
RECOMMENDATIONS
Ultimately, the Association believes that regulating merchant fees will go some way in
supporting the revitalisation of small business, particularly those in the hospitality sector who
have faced exorbitant merchant fees for far too long. For the Association and the hospitality sector more generally, we submit that during review of the Bill, the Committee considers its contents with the following areas in mind:
- Education – make sure the hospitality industry is well informed of the new obligations imposed on merchants by the Bill
- Technology – ensure the proposed regulatory arrangement is flexible enough to address the intricacies of the rapidly evolving payment ecosystem
- Other unregulated payment systems – the majority of e-commerce, mobile wallets, and Buy-Now Pay-Later service providers generate revenue through merchant fees that are significantly higher than fees incurred via contactless debit and credit card transactions.