Lower card fees to benefit Kiwis and small businesses


The Government is moving ahead with plans to regulate the bank payment system to make merchant service fees on debit and credit card fees fairer and less of a burden for Kiwis and businesses.

“We know the high cost of merchant service fees in New Zealand is a problem, and have today announced proposals for bringing these fees down, so it’ll be cheaper to use your money and businesses benefit too” Commerce and Consumer Affairs Minister David Clark said. 

“Banks generally charge merchant service fees for credit and contactless debit card transactions. New Zealand retailers pay their bank nearly twice as much as their Australian counterparts on these fees.

“The high cost of these fees puts added financial pressure on businesses at a time when they are dealing with the economic impacts of COVID-19. In many cases, consumers are picking up the tab, as retailers pass on these costs through higher prices for goods and services.

“Interchange fees, which banks charge for credit and debit transactions, form a large share of merchant service fees. We are looking at ways of regulating these fees by introducing hard caps, targeted for different classes of retailers.”

David Clark said that with the recent uptake in consumers switching to contactless payments to protect against COVID-19 transmission, there is even more of a need to reduce merchant service fees. 

“Until recently, EFTPOS has been the main way Kiwis pay for goods and services, and this is generally fees-free. Increasingly, however, consumers are favouring contactless debit and credit cards, which attract fees” said David Clark.

Small Business Minister Stuart Nash said smaller businesses are predominantly bearing the brunt of merchant service fees, which are too high.

“New Zealand retailers pay more than other countries, costing businesses on average $13,000 more per year than their Australian counterparts,” Mr Nash says.

“Because small businesses are so heavily reliant on credit and debit card transactions, they are at the mercy of the banks when it comes to receiving payments for goods and services. 

“Reducing this business overhead would mean businesses can hold onto more of their own money and pass on savings to consumers. This in turn will aid the recovery from the pandemic by putting more money back in the economy.”

Stuart Nash was pleased to see the move banks made early in the pandemic to temporarily waive fees on contactless debit card transactions for small businesses, and raise the contactless purchase limit from $80 to $200 per transaction.

“This showed empathy and understanding for New Zealand businesses and consumers. There is nothing to stop banks starting to change their fee structure right now on card payments.”

The Ministers will report back to Cabinet by April 2021 with the outcome of the consultation launched today, before progressing with regulatory changes through Parliament. 

Consultation closes on 19 February 2021. You can view the consultation here:https://www.mbie.govt.nz/have-your-say/regulating-to-reduce-merchant-service-fees.

The consultation document and forthcoming regulatory changes delivers on an election manifesto commitment by Labour.


The Government’s action on merchant service fees is part of broader work on retail payment systems and open banking to deliver greater benefits for consumers and businesses. This includes a recent consultation on options for establishing a consumer data right to allow consumers to harness the power of their data. The potential benefits of giving consumers greater access to how their data is used include the development of new and innovative payment methods that reduce costs for businesses and consumers.

Read more about retail payment systems and open banking.

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