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Bank fees targeted in New Zealand credit card review

Xinhua, October 19, 2016 Adjust font size:

The New Zealand government Wednesday signalled its intention to tackle the country's notoriously high credit card fees.

Shoppers in New Zealand often leave a shop empty-handed when they find small retailers refuse to accept credit cards because of the fees charged.

Commerce and Consumer Affairs Minister Paul Goldsmith on Wednesday released an issues paper on retail payment systems for public consultation.

Concerns had been expressed around the cost of credit card payment fees in New Zealand, particularly in comparison to Australia, Goldsmith said in a statement.

The paper would help the government decide whether regulation was needed to ensure a fair distribution of costs between banks, businesses and consumers.

There was a variety of policy responses to retail payment fees internationally, ranging from caps on charges such as in Australia, to minimal regulation as seen in Canada.

"In most markets, we expect competition between providers to keep costs down. The issues paper raises the question of whether or not that is happening in practice," said Goldsmith.

"Meantime, the sector is experiencing rapid technological change and innovation. In that context, I remain cautious about regulation that could affect innovation," he said.

"But the government is watching this area closely and is prepared to consider regulatory options if competition fails to moderate costs."

Retailers group Retail NZ welcomed the consultation paper, saying New Zealand merchants paid substantially more than merchants in other markets for accepting credit and contactless debit cards, which meant higher prices for consumers.

"The fees that merchants have to pay to accept credit and contactless debit payments are substantially higher in New Zealand than in comparable jurisdictions such as Australia and the UK," Retail NZ general manager for public affairs Greg Harford said in a statement.

"On average, New Zealand merchants pay 1.7 percent for credit card transactions and 1 percent for contactless debit transactions, compared to 0.89 percent and 0.36 percent in the UK, and 0.78 percent and 9 AU cents (7 U.S. cents) per contactless debit transaction in Australia." Endit