Hoping politicians play their cards right

A review of the payments sector should protect existing benefits, writes Peter Chisnall, Mastercard’s Country Manager for NZ and the Pacific Islands.

New Zealanders really like paying by card. Roughly four in five payments made for goods or services in New Zealand, are made with credit, debit and pre-paid cards.

According to the OECD, New Zealand has the lowest level of cash in circulation among the 35 member countries.

But with payment technologies advancing rapidly, New

Zealanders are embracing new offerings like Tap & Go and mobile wallets. The ease, choice and convenience of shopping online are also driving the overall trend away from cash.

It’s not much of a stretch to predict an increasingly cashless future, so it’s important to ensure the right policy settings are in place to continue to encourage innovation and enhance safety and security.

The Ministry for Business, Innovation and Employment (MBIE) is presently reviewing the New Zealand payments sector. As part of its inquiry, MBIE is looking at whether the market is operating efficiently in the face of technological change and is delivering value to consumers, merchants and banks.

In framing its review, MBIE references reward points as a key driver of why people use cards.

We at Mastercard think that underplays the tremendous value cards have always provided users at both ends of the transaction.

Our position on regulation has always been that it’s important when there has been market failure; however throughout this review it has been clear there is no market failure. In fact, robust

Robust competition has benefited us in New Zealand.

competition has benefited us in New Zealand – it’s the reason we have such a strong payments market.

Electronic payments provide card users unparalleled security compared to cash.

The current framework also allows for interest-free days on credit card purchases – something that is widely valued by New Zealanders, particularly small businesses as a means of helping to manage lumpy cash-flow.

Businesses also receive significant value by accepting cards. They’re guaranteed payment for goods and services, irrespective of whether the cardholder repays the issuer of the credit card (their bank), freeing them from the worry of credit risk.

Card technologies also facilitate business growth and innovations such as online commerce, selfcheckout and bespoke payment apps, giving customers more choice and a better customer experience. And importantly, electronic payments enrich New Zealand’s economy, boosting productivity by reducing cash handling and administration costs, and increasing the transparency of financial transactions.

Any change to the existing policy settings should be carefully considered to protect these benefits.