Consultation opens on regulating merchant service fees

Published: 10 December 2020

The Ministry of Business, Innovation and Employment has opened consultation on options to reduce merchant service fees on debit and credit cards.

Banks charge retailers a merchant service fee when a customer uses a credit or debit card (contactless or online) to make a payment. These fees are higher in New Zealand than they are in other countries such as Australia.

While EFTPOS is essentially fees-free for retailers, its use is in decline as consumers are increasingly favouring contactless debit and online transactions. As a result, retailers are having to absorb higher merchant service fees. 

Proposals

Interchange fees, which banks charge for credit and debit transactions, form a large part of a merchant service fee. The Government is considering regulating interchange fees by introducing a hard cap. Other potential measures include:

  • facilitating collective bargaining to support small businesses
  • codifying rules and practices around surcharging, bundling of merchant service fees, rewards and loyalty schemes
  • requiring banks to disclose specified information about merchant service fees to improve transparency.

Read the Issues Paper and have your say

Read the Beehive media release(external link)

Find out more about the retail payment system and open banking

MBIE media contacts

Phone: 027 442 2141
Email: media@mbie.govt.nz