Virus just made Paywave a public health issue
The best prevention for coronavirus is good hygiene.
But high fees mean that when you walk into many shops, there’s a “No Paywave” sign sellotaped to the Eftpos machine.
You’ve got no choice but to touch the same keypad as hundreds of others that day, almost always with no disinfecting in between.
(You can’t catch Covid-19 just by touching a surface. But the virus will last on an uncleaned surface for up to 24 hours, and it can subsequently get into your body through your nose, mouth or eyes if you touch your face at some point after being in contact with an infected surface.)
On Twitter, Mark Rushworth, Lance Wiggs, Dean Hall and other entrepreneurs have called for the fees to be removed during the pandemic — so all retailers can enable contactless credit card payments, plus Apple Pay and Google Pay from a phone or watch.
And HealthSoft executive director Ross Peat told the
Herald he would like to see the Paywave limit (before you have to enter a PIN regardless) raised from $80 to $200.
A good way to avoid that limit is to use Apple Pay or Google Pay — where facial recognition or a click on your phone serves as a proxy for entering a Pin for a purchase of more than $80 — or would, if fees were lower so more shops offered contactless payments.
Banks charge retailers a merchant fee every time someone pays with a credit card, debit card or uses contactless payment and part of this fee is used to pay the bank which issues the card a person pays with — this is called the interchange fee.
Credit card networks set a maximum amount for the interchange fee and have been under pressure to bring them down here after a warning from the Government it could follow overseas jurisdictions and regulate the market if they don’t fall.
Research by Retail New Zealand in 2018 found the average merchant fee in New Zealand was 1.6 per cent of the value of a transaction for credit cards — double the 0.8 per cent charged in Australia where they are regulated.
For contactless debit cards, the fee averaged 1.2 per cent in New Zealand and 0.6 per cent in Australia — where Paywave is nearly the norm.
Commerce and Consumer Affairs Minister Kris Faafoi fired a warning shot at the industry in 2018, and in April 2019 Visa dropped the limit for interchange fees, with MasterCard following suit.
But the “No Paywave” stickers continued.
One commentator has mused darkly that credit card companies use merchant service fees to help fund the loyalty schemes they use to compete for customers — so high fees for retailers effectively pay for all those free flights and toasters (though it’s also worth noting the competition is now somewhat one-sided, with Visa soon to dominate four of the five major banks).
In October last year, Faafoi said he was unhappy banks had been slow to “unbundle” contactless credit and debit card fees for retailers and open their banking networks to “fin tech” competitors.
“I’m not necessarily happy with the timeframes and we’ve sent that message to both the banks and Payments NZ [the industry’s governance organisation] to get a move on, otherwise there could be regulation,” Faafoi said.
And Retail New Zealand chief executive Greg Harford said another big issue for retailers was the cost of merchant fees charged by the banks and the fact those costs were not transparent.
“Retailers pay merchant service fees to their banks — and the banks pay interchange fees to each other. Banks also pay scheme fees to Visa and Mastercard, but there is no published data on what those fees are.”
The pandemic might be the nudge needed for credit card companies and banks to take action themselves on fees or transparency — or for Faafoi to finally grind into action on his long-hinted-at regulation.
Or not. When the Herald tried to quiz the minister on Monday, his office sent a statement saying, “Minister Faafoi would prefer to leave comment on this to the likes of Paymark and the banking sector”.
A spokesman for Paymark said the issue of temporarily wiping fees, or lowering them, was “one for the banks and credit card companies”. (The Eftpos payment network operator was previously owned by ANZ, Westpac, BNZ and ASB, who each had a 25 per cent share; the banks sold it to the multinational Ingenico Group last year).
He also said data wasn’t available yet on how many, if any, retailers were moving to support contactless payments off their own bat.
In an email to customers, Hell Pizza said it had activated tap-and-go payments at all its stores.
Mastercard, Visa and the major banks did not immediately return requests for comment.
And despite being the focus of attention from Faafoi over the transparency (or lack of) around contactless payment fees, and the lack of competition, Payments NZ said through a PR company, “Payments NZ is not involved with setting up contactless payments fees, so is unable to provide any comment.”
So, on the face of things, it looks bleak for retailers worried about fees, and customers worried about hygiene.
And it is. Though the Herald understands there might be some relief for retailers on the fees front later this week, which could in turn get a few of those filthy “No Paywave” stickers peeled off.
The pandemic might be the nudge needed for credit card companies and banks to take action themselves on fees or transparency — or for Faafoi to finally grind into action on his long-hinted-at regulation.