Election 2020: Labor to target bank fees in small business policy today

Union leader Jacinda Ardern today will present a policy aimed at reducing the amount of money that small businesses are required to pay for contactless payment services.

The Herald understands that part of the Labor plan aims to reduce the hundreds of millions of dollars paid in such fees each year.

Today’s policy launch follows a hectic day for political parties as the election campaign began yesterday, with National revealing plans to combat methamphetamine and NZ First leader Winston Peters promoting votes at the University of Otago.

Ardern is in Tauranga today to reveal the party’s small business policy. It is understood to include the regulation of commercial service fees, a move that is expected to be welcomed by the retail sector, which has long been calling for changes.

Businesses are charged fees for the use of contactless debit and credit card transactions, including mobile wallets and payWave, but there is no such fee for using an eftpos card by inserting or swiping.

Contactless payment fees have been an area of ​​controversy in New Zealand, which has much higher payment fees than Australia or the UK, costing businesses here hundreds of millions of dollars a year.

Retail NZ General Manager of Public Affairs Greg Harford said that because retailers tend to incorporate their bank charges into their overall prices, there is effectively an “uneven transfer of wealth from less well-off Kiwis to well-off New Zealanders.”

Bluntly, he said, “High tariff levels are costing the entire economy.”

Today’s announcement would be good news for many small businesses across the country that have been struggling in the wake of Covid-19, Harford said.

Several months ago, at the height of the Covid-19 pandemic in New Zealand, the debit card
PayWave fees have been reduced to zero to encourage contactless payment.

But the rates were reintroduced in July, and companies began asking for them to be lowered.

Companies that make it difficult

Auckland bar owner Mike Howie of Freida Margolis in Gray Lynn told RNZ in August that those fees were costing him thousands of dollars during what was already a difficult time.

He said that many companies were making it difficult in the CBD and needed a break or they could go under.

“It is too difficult for some of these companies. We are lucky at the moment, but if this continues, we again have to start the same way, ‘Where can we take a break?’

“For example, are the banks going to do something for us this time? At the moment, they said they were giving us free payWave (during closing) – my bank fees quadrupled when they activated my payWave, it was only debit cards.

“I am now in the thousands of bank fees, instead of the hundreds.”

According to figures from the economic consultancy Covec, the fees will likely cost companies $ 556 million by the end of the year. Without intervention, that would grow to $ 711 million by 2025, Covec’s figures show.

Retail New Zealand has been questioning why these fees are so high and is calling for regulation to lower them.

In its 2019 Payments Survey, it noted that these fees are unregulated in New Zealand, which means they are higher than in other countries.

For example, the contactless payment fees in New Zealand are 1.1 percent per transaction for a debit card.

But that figure is 0.6% in Australia and 0.3% in the UK.

The gap is also wide when it comes to contactless credit card payments – in New Zealand, it’s a 1.5% fee compared to 0.8% and 0.6% in Australia and the UK, respectively.

Ardern is in Tauranga on the election campaign today, beginning his public appearances at a Papakainga development site just before 10 am.

You will then visit the small business later in the morning, before making your small business announcement at noon.