Banks pay for failure to act on fees
Banks could have avoided looming regulation of the fees they charge retailers to process credit and debit card transactions if they had ‘‘done the right thing’’, Small Business Minister Stuart Nash says.
The Government kicked off consultations on regulating merchant fees on card transactions yesterday, forecasting that it would reduce retailers’ costs and in some cases flow on to cheaper goods for consumers – particularly when they are shopping with smaller businesses.
Speaking at a bookshop at Victoria University in Wellington, Nash said that if banks were going to be ‘‘proactive’’ on reducing fees without regulation, then they would probably have done that already.
‘‘We did not need to regulate this if they had done what I consider to be the right thing,’’ he said.
‘‘They have not. We are stepping in, so my message to banks is: put a submission in but you have heard what we want to do and we are determined to make sure that our New Zealand retailers do not pay exorbitant prices compared with our competitors overseas.’’
Jessica Godfrey, general manager of Vic Books, said it paid a fee of 1.85 per cent on each sale when customers used a credit card to buy books and a 0.7 per cent fee on debit card transactions. ‘‘As a small business we just have no power or influence to change their minds about those fees so I think it is entirely appropriate for the Government to be intervening,’’ she said.
Retail NZ chief executive Greg Harford said the review was good news for retailers ‘‘and ultimately for consumers’’. ‘‘Fees in New Zealand have been higher than other markets for a sustained period of time,’’ he said.
‘‘We have seen some movement over the past 18 months or so from the card companies and the banks to lower fees at the margins but we still think they are out of kilter.’’
Bankers’ Association chief executive Roger Beaumont said it was ‘‘a complex area’’. ‘‘We will consider the consultation paper to determine our response on behalf of the industry.’’
ASB welcomed the consultations and said it had ‘‘immediately moved to implement a substantial rebate’’ for small and medium-sized business customers, backdated to December 1, until their completion. But its general manager of business banking, Tim Deane, said a large portion of merchant fees related to interchange fees over which ASB had ‘‘little control’’.