June 2022

Lower card fees could bring prices down

New laws will see businesses paying less to banks for accepting some card types.  

Businesses will soon be paying lower fees to their banks for accepting credit and contactless debit card payments. The fees – known as merchant service fees – will be regulated under the new Retail Payment System Act, which will limit how much banks can charge businesses.

Merchant services fees aren’t charged when eftpos is used or when a debit card is swiped or inserted. The fees kick in when customers use credit and contactless debit cards – both of which have increased in popularity since the Covid-19 pandemic began, Commerce and Consumer Affairs Minister David Clark said.

He expects New Zealand businesses to save around $74 million a year once the fee limits kick in, on 13 November 2022. He also expects consumers to benefit from savings as business overheads drop.

Consumer NZ chief executive Jon Duffy said he was pleased the legislation had finally been enacted as fees had been significantly higher here than in Australia.

“Merchant service fees increase costs for businesses and ultimately result in higher prices for consumers, while lining the pockets of the banks and credit card companies,” Duffy said.

The act also gives the Commerce Commission the power to ensure any surcharges set by retailers, to recover the cost of merchant service fees, are reasonable.

“We receive regular complaints about exorbitant surcharges so we’re happy to see the Commerce Commission will be keeping an eye on this. Some retailers charge consumers a lot more than the cost to them of accepting the payment. This clearly needs to change,” Duffy said.   

Member comments

Get access to comment

G A H B.
04 Jul 2022
Credit card fee

Today I visited a store sign at entrance saying if you pay via credit card it's a dollar more

N R.
13 Jun 2022
Thank you - now could you take a look at Rural Delivery charges?

This is interesting hidden information, and a good result. How about turning your attention to the highly varied Rural Delivery charges, which may vary from $3 to $17 for a small package. Highly inconsistent and someone is pocketing $$ somewhere, and it's probably not the Rural Delivery contractor.

B A S.
13 Jun 2022
Why wait until November?

Banks will merely type a lower fee and press 'enter'. All the places that charge extra for credit card payments will still add another fee on like Air NZ has done for years.

Roger W.
11 Jun 2022
What really happens when credit cards are used

The acceptance of credit cards and paywave, by a merchant, costs the merchant nothing as by now they have generally increased prices to compensate. Those who use cash or insert debit cards to pay for the same products are now subsidising the merchants' costs...

The Real John R.
12 Jun 2022
YES!

Even more true for merchants who are into the Buy Now Pay Later thing. Merchants can choose to charge me a fee for using my credit card. Merchants using BNPL have an agreement with the BNPL companies which prevent them giving me a discount for paying cash. And I believe that the fee that BNPL companies charge merchants is greater than the commission the banks take for credit card payments.

Ian & Katrina M.
11 Jun 2022
Thanks Consumer

Thanks, but... what took you so long? These fees cost us all, yet Consumer have not yet initiated any campaign to encourage individuals to use debit cards, and not to use contactless payment. I encourage Consumer to focus more on global costs to the community rather than benefit to individuals. Most people don't actually know how much we erode profit and increase prices by using credit cards and paywave. I'd encourage less media publicity on sunscreens and more on payment-related costs.

Ralph C.
15 Jun 2022
Are debit cards really a good idea?

I hope Consumer does not campaign to increase use of Debit Cards. I accept that they have a use for people without a credit card making online purchases, but for day to day use they offer none of the protection that credit cards offer. In particular my understanding is that unlike credit cards, there is no obligation on banks to provide charge backs - e.g. you order a pair of Raybans from a Facebook retailer. a month later, you receive fake ray bans shipped from Hong Kong. At least if you paid by CC, you can ask for a charge back.

Another example of CC protection is rental car hire. Say you hire a car in Aussy with a debit card. The car is returned to the hirer undamaged and 2 weeks later back in NZ you get a $2,500 charge for alleged damage that you dispute. The hirer will not substantiate their claim and won't refund the charges. If you paid with a Debit card then good luck negotiating and taking court action over seas.

If Consumer NZ is going to run any campaigns regarding debit cards, they should be to educate consumers on the risks and lobby the govt to extend CC protections to debit cards.

I agree that bank fees on cards and contactless payments are an unnecessary tax on consumers and merchants. That said, many high volume low transaction amount businesses (e.g. cafes and icecream shops) prefer contactless during busy periods as they can serve many more people and get those queues moving!

James C.
11 Jun 2022
About bloody time

CC merchant fees have been too expensive for many small operators.
Banks should be ashamed of themselves for price-gouging. Shows that the big Aussie banks will only willingly do what's right when forced by regulation.
Kiwis need to vote with their feet and move to the likes of TSB and other kiwi banks.

Paul W
11 Jun 2022
Jon Duffy said fees had been significantly higher here than in Australia.

I sort of figured that as last time I was there in 2019 all markets and beach front stalls all had credit card payments with Pay wave and most shops I went to had Pay wave where as in NZ most market stalls won't take CC and only about 60% have eftpos.

Your Highness
11 Jun 2022
Paywave

Dies contactless payment mean payWave? Is so, I will in future insert my card. What a rort!

Steve
09 Jun 2022
About time!

The costs some business ‘pass on’ are a bit suspicious 🤨

James C.
11 Jun 2022
from experience - most costs are a genuine and necessary recovery

Merchant fees can be well above 4% for businesses and clubs that have a small number of transactions as its a scaled fee based on trans volumes.
That kind of fee percentage adds cost and cuts into margins in an all-too-meaninful way.