Taking the fight over fees to banks

Every time a customer uses a credit card at Mag and Turbo Tyre and Service Centre, owner Tina Bate is charged what are called merchant fees.

Banks in New Zealand charge merchant fees up to 10 times higher than other countries because there are no regulations, said Merchant Advocacy & Guidance Network (Magnet) Association president Rebecca Fairbrother.

The Ministry of Business, Innovation and Employment (MBIE) said depending on how a payment is made, merchant service fees are on average between 0 per cent for EFTPOS to 1.5 per cent for credit cards, but can be over 3 per cent for some merchants.

Six months ago, Bate hired Fairbrother to help her to reduce those fees.

‘‘Merchant fees are a lot of money for us. You just accept it because you don’t know who to go to, or how to negotiate a different rate, or even know that you can, so that is why we started to work with Rebecca. She advocates on our behalf with the banks to get a better rate,’’ Bate said.

Bate’s merchant fees went from 2.10 per cent to 1.70 per cent since Fairbrother renegotiated the rates with her bank.

Fairbrother worked as an analyst for the Reserve Bank of Australia before she moved back to Blenheim, setting up the Merchant

Advocacy & Guidance Network (Magnet), which represents businesses to bring down card transaction fees.

Fairbrother said the Government was looking at regulating the interchange fee component of merchant service fees by introducing hard caps.

Fairbrother, who made a submission, saw key problems with what MBIE was proposing.

‘‘To regulate merchant fees, countries like UK and Australia have created a regulator to set specific regulations, which makes sense, whereas in New Zealand, it seems MBIE would be the one coming up with regulations.

‘‘In Australia, the regulator is part of the Reserve Bank of Australia. They created a new unit 20 years ago for this purpose.

‘‘We have a blank slate to regulate the payments system and can learn from overseas regulators,’’ Fairbrother said.

A Westpac NZ spokesperson said they support prudent changes that improve the New Zealand payments system.

Fairbrother was concerned that the process was going to be rushed through with a report back to the Government in April.

She also said the Government must take all these things into account and regulate the credit and debit card system, not just merchant fees.

‘‘There are many other things going on behind the scenes in the credit and debit card system that must be factored in. For example, interchange fees, surcharging, scheme fees, network fees, eftpos, payments technology.’’

Any future regulator should be given the power to regulate any payment system, she said, including ways to pay that don’t yet exist in New Zealand, and the right regulations can accelerate this.

New alternatives such as open banking or fast way payment must be considered in the future regulations, Fairbrother said.

In other countries, she added, technology companies were creating better ways to pay, governments were promoting competition in payment services through new regulations, and fast payment systems were being built.

BRYA INGRAM/STUFF Merchant Advocacy & Guidance Network Association president Rebecca Fairbrother is representing business owners who want to reduce the amount paid in merchant fees to banks.