Hopes contactless payments will become more widespread as transaction fees slashed

There are hopes contactless payment options like payWave will become even more widespread in New Zealand as Visa and Mastercard slash their interchange rates.

Source: 1 NEWS

Visa is reducing its interchange rates for contactless debit and credit payments from August 15, while Mastercard's changes took effect on Saturday.

In the wake of the announcement, Westpac today announced it's lowering its merchant fees for small and medium businesses, facing a new maximum rate of 0.60 per cent on contactless debit transactions.

Retail NZ chief executive Greg Harford says it's great news and helps reduce some of the complexity within the rates.

"Retailers need to be able to take payments from customers and they want to be able to do that in a way that's cost effective," he told 1 NEWS today.

"It's great news that Visa, Mastercard and the banks are coming to the party with some reasonable price packages for that."

A spokesperson for BNZ confirmed its own announcement is imminent following a regular pricing review.

Meanwhile, Kiwibank says the majority of its customers are already on interchange-plus pricing "and will therefore automatically receive the benefit of the reduced interchange rates".

Mr Harford says the changes mean it'll be cheaper for retailers to activate contactless payment, like payWave.

One retailer he spoke to was facing fees of 4.75 per cent for each contactless payment - an "exuberant cost".

"We know that customers like contactless payments, they're perceived to be cleaner, simpler and more hygienic, which is important in this day and age," Mr Harford says.

"And we know that something like 35 per cent of New Zealanders have increased significantly their use of contactless since the Covid-19 outbreak. 

"This is good news, it will help retailers pick up contactless and if retailers think they're paying too much for contactless transactions, they really need to talk to their bank and make sure they're on the right kind of pricing plan."

Transaction rates are usually offered by banks either on an interchange-plus arrangement, where they're charged the direct interchange rate plus a fee for processing costs, or a single flat rate on all transactions, Mr Harford says.