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NZ’s higher card transaction fees

POS, payment, card, credit card, spendingNew research by Covec shows that Kiwi retailers and consumers appear to pay substantially more than their overseas counterparts for credit and debit card transactions.

“While standard EFTPOS transactions have generally been free for merchants and most consumers, contactless debit card transactions cost merchants an average one per cent in fees, while credit card transactions cost, on average, 1.4 per cent,” says Retail New Zealand general manager for public affairs, Greg Harford.

“For example, a NZ retailer taking a $50 payment via a credit card transaction pays, on average, 70 cents in fees, while currently the same transaction would cost a UK retailer 50 cents, and an Australian retailer 42 cents.”

In light of this, Retail NZ is calling for greater transparency and oversight of fees set by banks and card companies.

“It’s a little hard to understand why NZ retailers and consumers seem to be paying quite a bit more than their counterparts in overseas markets, except that most other jurisdictions now have agencies charged with providing oversight of bank and card fees.

“Retail NZ is calling for the introduction of a comprehensive information disclosure regime, so that everyone can understand the fees charged, and the total cost to the economy every year.”

While a fee of one per cent may not sound like much, it adds up. The report by Covec forecasts that, over the next 10 years, retailers could be paying as much as $3 billion in charges. These costs are ultimately paid by NZ consumers and, as a large proportion of this money could also end up flowing offshore, there is potentially a significant impact to the NZ economy.

“These costs could also grow over time as new payment technologies continue to displace NZ’s traditional EFTPOS system, particularly if you account for spending in the hospitality and tourism sectors as well,” says Harford.

“It looks like New Zealanders are probably paying too much, particularly when costs are compared internationally, and we want to see greater transparency and oversight. Retailers are keen to work with all parties to see increased transparency introduced as soon as possible.”

MasterCard responded to Retail NZ by pointing out one of the fees it charges retailers for card payments is unavoidable and non-profit making.

According to MasterCard’s NZ country manager, Peter Chisnall, interchange fees are critical to the payments industry and regulating them could have a detrimental effect.

“Interchange fees cover a range of costs borne by the card issuer including but not limited to interest free days, fraud prevention, bad debt and innovation. Interchange balances the costs consumers and merchants pay,” he says.

“If the fees were artificially lowered by regulation, cardholders could suffer in a range of ways, including increases in cardholder fees, reduced product benefits and higher interest rates.”

A copy of Retail NZ’s paper Towards Fairer Payments Fees is available online at

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