New rules set to save $74m
The Government says new legislation to restrict merchant fees could save businesses up to $74 million each year – but there is a warning those savings may not be passed on to shoppers.
Commerce and Consumer Affairs Minister David Clark yesterday announced the introduction of legislation aimed at reducing merchant service fees, the fees banks charge businesses when customers use a credit or debit card to pay.
Before the global pandemic, the primary method of payment for shoppers was eftpos. But customers were increasingly favouring contactless debit and credit cards, Clark said.
‘‘The high cost of these fees puts added financial pressure on businesses at a time when they are dealing with the economic impacts of Covid-19,’’ he said. ‘‘Reducing the merchant service fees that New Zealand businesses are being charged is a priority for this Government and critical to the recovery of the economy.’’
Merchant service fees were unregulated and have been set higher in New Zealand than they were in Australia, he said. The merchant fees could add significant overheads for retailers who often passed these costs on to consumers.
Following feedback from a recent consultation period, a Retail Payments Systems Bill will be introduced this year to require reductions in interchange fees as soon as possible; to enable direct intervention by the Commerce Commission using a broad suite of powers to regulate different participants in the retail payment system; and to introduce a disclosure and reporting requirement to enable the commission to monitor the retail payments system.
‘‘One of the main components of merchant service fees is the interchange fee. We will cap those for credit card transactions at 0.8 per cent . . .,’’ Clark said. ‘‘We are also capping the interchange fees charged for online debit card transactions at 0.6 per cent. Contactless debit card interchange fees will stay at their current levels of 0.2 per cent or less, and for swiped and inserted debit, it will stay at 0 per cent.’’
The Government aims to seek final policy decisions on reducing merchant fees in mid-2021, with a view to the full regulatory regime coming into effect next year.