Businesses in New Zealand may save about $74 million per year following an announcement by the Government that it will lower card fees.
Commerce and Consumer Affairs Minister David Clark said today merchant service fees, which banks charge businesses when customers pay with a credit or debit card, would be reduced.
With Kiwis favouring contactless debit and credit cards over EFTPOS during the Covid-19 pandemic, Clark said it had put added financial pressure on businesses when they needed it least.
"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."
These fees are currently unregulated and are set much higher than they are in Australia.
Clark said this adds significant overhead for retailers, meaning they often pass costs onto consumers through higher prices.
The interchange fee - one of the main components of merchant service fees - will be capped at 0.8 per cent for credit card transactions. This is in line with Australia.
"We’re 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," Clark said.
"The new regulatory regime is estimated to result in savings of approximately $74 million each year for New Zealand merchants. Smaller retailers, and those who rely on credit or online sales will particularly benefit from these savings."
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.
Restaurant Association CEO Marisa Bidois said the decision was a "very welcome" one for the hospitality industry, with the fees costing businesses thousands each year.
She said this was about $13,000 more per year than Australian counterparts.
Ninety per cent of the association's members believed the current merchant fee system needed to change, Bidois said.
She said 69 per cent of respondents to a member survey earlier this year wanted to see regulation introduced to reduce such fees.
The association had lobbied hard for regulation, so it was happy the Government was listening.