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The government is moving forward with its electoral promise to introduce regulation to reduce the fees banks charge retailers for the payment wave.
Photo: 123rf
Commerce and Consumer Affairs Minister David Clark and Small Business Minister Stuart Nash announced the launch of a discussion paper at VicBooks in Wellington this afternoon.
Clark said it was unfair for New Zealand retailers to pay nearly twice as much as their Australian counterparts.
“The high cost of these fees puts additional financial pressure on businesses at a time when they are faced with the economic impacts of Covid-19. In many cases, consumers are picking up the bill as retailers pass these costs on to through higher prices for goods and services.
“Interchange fees, which banks charge for credit and debit transactions, make up a large part of merchant service fees. We are looking for ways to regulate these fees by introducing caps, targeting different classes of retailers,” said.
Nash said that in a Covid-19 environment, offering contactless payments was more important than ever, and smaller businesses were predominantly bearing the brunt of these high fees.
“Because small businesses rely heavily on credit and debit card transactions, they are at the mercy of banks when it comes to receiving payments for goods and services.
Small Business Minister Stuart Nash buys a book at VicBooks in Wellington.
Photo: RNZ / Yvette McCullough
“Reducing the overhead of this business would mean that companies can keep more of their own money and pass the savings on to consumers. This, in turn, will help them recover from the pandemic by putting more money back into the economy,” he said.
Nash said banks showed “empathy and understanding” during the shutdown when they temporarily waived these fees.
“There is nothing to stop banks from starting to change their fee structure at this time on card payments,” he said.
VicBooks CEO Jessica Godfrey said these fees were hurting small businesses like hers.
He said they tried to negotiate directly with the bank to lower fees.
“As a small business, we just didn’t have the power or influence to change our mind about those fees, so I think it’s entirely appropriate for the government to step in and create some parity between New Zealand and Australia,” he said.
Godfrey said this would make a tangible difference to his business.
Commerce and Consumer Affairs Minister David Clark with VicBooks CEO Jessica Godfrey.
Photo: RNZ / Yvette McCullough
“We are talking about thousands of dollars at a time, which is really difficult and we are looking at each expense line to try and find savings.
Godfrey said that New Zealand’s economic recovery was a joint effort.
“This is a five million team, and I think banks should really play their part to be team players and support New Zealand small businesses,” he said.
New Zealand Bankers Association Executive Director Roger Beaumont said in a statement: “This is a complex area. We will consider the consultation paper to determine our response on behalf of the industry.”
One of National Finance spokespersons Andrew Bayly said it was a good move, however he would like it to be extended to all fees, including administering eftpos.
Andrew Bayly, National Party Finance Spokesperson
Photo: RNZ / Dom Thomas
However, he said that with work racking up so many other costs in small businesses, it wouldn’t have much of an impact.
“It’s important, but it’s not going to change the dial. It’s not going to move the New Zealand economy and I think that should be the debate we’re having about how to move the dial.
“This is an important step, but a small one, that’s for sure,” he said.
Nash dismissed him as “deaf.”
“Small businesses are looking for ways to cut costs in really tough times, let’s be honest about it. And you heard Jessica say that this will make a real difference to your business.
“So those who say this doesn’t make a difference, or it won’t make a difference, I won’t,” he said.
The consultation on the discussion paper closes on February 19.
The minister will report to Cabinet in April, before moving forward with regulatory changes through Parliament.
