2020 Election: Labor promises to cut payment wave, credit card fees, and lend billions to small businesses

Labor promises an end to expensive fees for things like pay waves and card transactions, and an extension of a costly loan plan as part of its small business package announced Tuesday.

The party wants to regulate commercial service fees (MSF), which are high in New Zealand compared to other countries like Australia.

These are fees charged by banks for services that include card and paywave transactions, and force retailers to either absorb the high cost themselves or pass it on to consumers.

Labor small business spokesman Stuart Nash said Labor would cut those costs.

“We will adjust the regulations on commercial service fees charged by banks to retailers. Retailers are estimated to pay on average $ 13,000 more than their Australian counterparts each year in merchant service fees. This must change, ”Nash said.

Dominico Zapata / Things

Labor estimates that the fees cost the average retailer roughly $ 13,000 more than in Australia.

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A survey conducted by Retail NZ showed that retailers paid up to 1.1 percent on each contactless debit card transaction and 1.5 percent on each credit card transaction to their banks.

There, retailers are charged just 0.6 percent for each contactless debit transaction and 0.8 percent for credit cards.

In the UK, fees are even lower, at 0.3% for contactless debit and 0.6% for credit cards.

Labor can’t get rid of fees entirely, but it wants to cut them through regulation.

It won’t say how, but it does say that the Reserve Bank and the Financial Markets Authority are likely to carry out the regulation, with input from the Commerce Commission.

In Australia, regulation has taken the form of a rule stating that rates are set at a cost-based benchmark to avoid price speculation.

In the United States, the Federal Reserve has the power to limit interchange fees.

During the Covid-19 pandemic, large banks temporarily eliminated payment wave fees to encourage contactless payments and reduce the opportunity to spread Covid-19 through payment terminals.

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Stuart Nash, spokesman for the Labor Small Business

Nash said reducing the cost of the pay wave would encourage acceptance of contactless payments, which have added health benefits.

“The point at which customers transact with businesses is a source of concern for both health and the economy,” Nash said.

“Contactless payments give customers and businesses greater peace of mind as we all work to eliminate the virus.”

Labor’s small business package also includes a $ 1 billion extension to its small business cash flow loan scheme.

The scheme was established earlier this year to allow small businesses to access cheap or free loans of up to $ 100,000 from the IRD to help them cover the costs of Covid-19.

Loans are free if repaid within the first year and then interest is charged at a rate of 3 percent, although interest accrues from the day the loan is contracted. Companies have five years to repay the loan.

The plan is currently scheduled to run for one year, but Labor promises to extend it for three years and increase the interest-free period from one to two years.

The party says the extension will cost $ 1.5 billion, assuming 1000 new apps a week, which will be paid for by the Covid-19 recovery fund.

The Treasury’s initial estimate for the loan scheme said it could cost between $ 3.25 and $ 6.5 billion.

Nash said the party would also seek to make some form of financial support for small businesses permanent.

“The workforce will expand the small business cash flow loan scheme. It will be available for another three years, ”he said.

“The second year of the loan will be without interest. We will also investigate more permanent sources of financing for SMEs ”.

– Stuff