Credit card fees rebound on shoppers

New Zealand shoppers are paying the price because it costs retailers ‘‘too much’’ to accept Visa and Mastercard payments.

Kiwi merchants paid more to accept credit and contactless debit card transactions than their counterparts in Australia and the UK, said Retail NZ, which represents more than 5000 retailers.

That was resulting in higher prices for consumers, said Retail NZ’s Greg Harford. The findings were released in Retail NZ’s 2018 Payments Survey yesterday.

‘‘Most retailers do not apply a surcharge for credit card or contactless debit card use, so the costs of high bank charges for accepting credit and contactless debit cards tend to be spread across all consumers,’’ said Harford.

‘‘The survey shows that, on a weighted-average basis, New Zealand merchants pay twice as much as merchants in Australia, and between three and six times more than in the UK.’’

Mastercard’s Ruth Riviere said the ‘‘scheme’’ payments systems, as the Mastercard and Visa payments systems were known, provided good value to merchants, reduced the costly handling of cash, allowed e-commerce to thrive, and boosted sales.

But Harford said: ‘‘The disparity in fee levels is growing as international regulators move to address the inherent unfairness in the fee levels being charged by banks and credit card schemes.

‘‘In New Zealand, on a weighted average basis, merchants pay 1.6 per cent for accepting credit cards and 1.2 per cent for accepting contactless debit cards.

‘‘This compares to 0.5 per cent and 0.2 per cent in the UK and 0.8 per cent and 0.6 per cent in Australia.

‘‘Retail NZ continues to hold the view that additional transparency and regulation is possibly required, in order to bring New Zealand into line with comparable overseas jurisdictions.’’

But Riviere said that in countries where such costs were regulated, like the UK and Australia, there had been ‘‘unintended consequences’’, such as banks lifting other fees to compensate.

‘‘What we have seen happen, especially on the consumer side, is an increase in the amount consumers pay for banking products,’’ Riviere said.

Retail NZ first raised concerns in 2015 over the high cost of ‘‘interchange’’, which is a fee charged each time a merchant accepts a payment.

Interchange is only part of the cost of a merchant accepting a scheme payment, and it is bundled up with other charges in what is commonly referred to ‘‘merchant service fees’’.

Retailers’ service fee concerns lead to political pressure, and Mastercard and Visa have now begun publishing interchange fees in a more transparent way, Commerce Minister Kris Faafoi was told in a letter from Payments NZ on Tuesday.

The new transparency coincided with Mastercard and Visa recently moving to lower some of their interchange fees.

Increasing consumer demand for contactless cards and technology resulted in substantial additional costs on merchants and consumers, Harford said.

‘‘High fee levels are costing the whole economy.’’