A Bill to help lower the fees charged when credit and debit transactions are made, is expected to save New Zealand businesses around $74 million a year.

The Retail Payment System Bill passed its third reading yesterday, regulating merchant service fees, and reducing a major overhead for small business.

'This Bill will help lower the fees charged when credit and debit transactions are made, and will save New Zealand businesses around $74 million a year,” says Commerce and Consumer Affairs Minister David Clark.

'It's important we see merchants benefit from lower fees as soon as possible. As those overheads drop, I'd expect consumers to benefit from savings.

'Before the Covid-19 pandemic, Eftpos, which is a fees-free method of payment, was the main way New Zealanders would pay for goods and services. However customers are now favouring contactless debit, credit and online payments more and more, and it is vital that retailers are able to keep up with their customers' needs.”

The Retail Payment System Bill, will address merchant service fees by:

• setting limits on interchange fees – the largest component of merchant service fees
• enabling the Commerce Commission to monitor the retail payment system and directly intervene to regulate designated networks
• empowering the Commerce Commission to ensure any surcharging by merchants is reasonable.

'One of the main components of merchant service fees is the interchange fee. We will cap those for credit card transactions at 0.8 per cent, which is in line with Australia,” says Clark.

'We're also capping the interchange fees charged for online debit card transactions at 0.6 per cent. Contactless debit card interchange fees will stay at their current levels of 0.2 per cent or less, and for swiped and inserted debit there will be no charge.

'This will have an impact on both Mastercard and Visa and will come into effect six months after enactment. This is the quickest it can be done and is swifter than when similar changes were made in Australia.”

For more information on the new regulatory regime, visit the Ministry of Business, Innovation and Employment's website.