Government moves to regulate merchant service fees have won the support of Retail NZ CEO Greg Harford.
The Minister of Commerce and Consumer Affairs David Clark announced Wednesday new limits will be set on the interchange level that card schemes can charge merchants, on transactions where consumers pay by credit or contactless debit cards. Interchange fees will be capped at 0.2 per cent on transactions involving a contactless debit card, while those swiped or inserted would be not be subject to fees. The Commerce Commission will administer the new rules.
In addition, a regulator will be allowed to impose additional pricing principles or limits on fees on other components of the overall merchant service fee as well as impose disclosure of compulsory information which Harford says will bring much-needed transparency to merchant service fees.
“For far too long New Zealanders have been paying high merchant fees and it is fantastic news that the government is finally moving to bring us in line with other countries that pay significantly less,” he said.
“Minister Clark is moving decisively to set firm limits on maximum interchange charges, and this will come into effect quickly. However, we note that there are other charges included in the overall merchant service fee charged to merchants. Additionally, e-commerce, and buy-now, pay-later services – as well as mobile wallets – incur even higher charges. We hope that the new regulator will use its powers to review and bring these fees down as appropriate.”
The move is estimated to save businesses around $74 million a year, but banking sources say it may impact loyalty programs which are partially funded through such fees.
Harford says Retail NZ has been advocating for merchant service fees to come down in New Zealand for many years.
“It is a serious issue that affects all New Zealanders through the flow-on increase to the price of goods and services. It is fundamentally unfair that the high cost of payments is borne by all New Zealanders through higher prices, and that only cardholders with valuable rewards programs see any benefit.
“Retail NZ will be carefully reviewing the documents released today, and looks forward to providing further input as the final details are worked through over the coming weeks.”