Hawke's Bay retailers could suffer after ban on card surcharges
'The PayWave options are a really quick and easy option for us to go and pay for something, but that might be taken away, because why would the business owner want to pay for that when they can't on-charge?
'We are going to go backwards.
'They will remove the flexibility and the convenience of us just using our phones and going 'ding'.'
Pip Thompson on Napier's Emerson St. Photo / Gary Hamilton-Irvine
She said, alternatively, business owners would be forced to up prices to absorb the cost.
There is no merchant service fee for Eftpos payments, such as when you insert your card.
Thompson questioned why banks weren't doing more to support local businesses with reducing the merchant service fee (for which the surcharge covers).
'I think we have cut the pie only in half, and they need to sort the other side of the pie out, so to speak, and go to the banks and say how are you going to help this process?'
Banks say they do not receive any benefit from surcharges, and the merchant service fee is required - part of which goes to Visa and Mastercard.
'New Zealand is unique globally in that our domestic card payments network [Eftpos], which is used for Eftpos cards and debit cards when they are inserted, is free for merchants, even though there is a cost to run this network,' an ANZ spokeswoman said.
'However, as in other jurisdictions, there are fees for accepting other means of payment including PayWave, credit and international cards.
'ANZ recovers its costs of providing our customers with payment facilities through a merchant service fee.'
She said the average merchant service fee was 1% of a transaction.
A merchant service fee is made up of 'scheme fees' and 'interchange fees', as well as some other costs.
The 'scheme fees' portion goes to either Visa or Mastercard (dependent on the card used), and the 'interchange fees' portion goes to the bank to cover costs such as fraud prevention, handling disputes, and authorising transactions.
The merchant service fee is initially paid to a 'payment acquirer' which can either be a bank or another provider like Windcave.
'Banks don't set or require surcharges - they are added by retailers/merchants at the point of sale,' a BNZ spokesman said.
'If it's more than what they're charged in fees, they keep the difference. Not the bank, not the acquirer, and not the card company.'
What local businesses think
Vinci's Pizza in Napier owner Vincent Michaelsen said he was supportive of the surcharge ban.
'We do PayWave and we don't do surcharges,' he said.
'I don't think there is necessarily a right or wrong [on whether you do surcharges or not].
'But my perspective, from a customer angle, is that I just want to make it easy.'
He said he felt that was the best decision for his business.
'I think as a business operator, you need to know your costs and make sure that it is covered in the back end.'
However, he said the best solution would be tackling the problem from both ends - with no surcharge and also no merchant service fee for businesses.
Cool Toys in Napier owner Glen Chan said he expected most retailers would have to build the extra cost into their pricing, after the surcharge ban.
'It tallies up. It really mounts up,' he said, of covering the merchant service fees.
He said he offers contactless payments with a surcharge currently, and a problem with potentially removing PayWave as an option in future was that customers liked and were used to it.
Adore Collection in Napier co-owner Sally Holyer said they did not charge a surcharge on contactless card payments.
'Yes it costs [us] but we find, especially when it is really busy in the summer in the cruise season, it speeds things up so much that is actually worth us doing.'
Gary Hamilton-Irvine is a Hawke's Bay-based reporter who covers a range of news topics including business, councils, breaking news and cyclone recovery. He formerly worked at News Corp Australia.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
NZ Herald
2 days ago
- NZ Herald
Heather du Plessis-Allan: Is the Govt so desperate they announce any half-baked idea?
Of all of the above, it's the ban that's going to give them ongoing headaches. On the face of it, it's great retail politics. Everyone hates being stung 2% for using the credit card at the sushi shop. But there will be consequences. The surcharge is there because it costs to use your credit card. Someone has to pay for it. Either you or the retailer. Currently, it's you in the form of the surcharge. After the ban, it'll be the retailer. And we're talking a lot of money. Interchange fees alone – the fees Visa and Mastercard charge – suck nearly $1 billion out of NZ businesses a year. Add what retail banks charge on top of that and we're talking several billion apparently. One retailer reckons they were paying $2500 a month just in merchant fees. That's $30,000 a year. They realised they were basically subsidising everyone's credit card loyalty schemes. So, they introduced the surcharge. No savvy small or medium-sized retailer will suck up a cost like that. If they can't get that back through a surcharge, they'll get it back by upping the price on products. So, while the Government can sell the story that they're saving consumers money through the ban, they're not. Pity the poor travel agents especially. Let's say they book flights to London for a family of four at the cost of $15,000. If the family put it on the credit card, which most of us would do, there is a $225 merchant fee. Once the ban kicks in, the travel agent will essentially be helping the family pay for their holiday. So, you can see why retailers are up in arms. They're so angry they've managed to mobilise the country's chambers of commerce into banding together in a statement criticising the ban. Their point is a fair one: the Government should really be dealing with the source of the problem, which is banks and credit card companies charging too much for a basic service. Ministers choosing to beat up on Kiwi retailers instead of sorting out big foreign bankers is bizarre. Even more so because SME owners are traditionally National Party and right-leaning voters. The Government is burning its own support base here. Which brings us to the weirdness of this. It should have been entirely predictable that this would blow back badly. So, why did they do it? Are they so desperate to get good coverage that they take any half-baked idea pitched at them by a minister at the weekend to announce the following Monday? Did they run out of time to interrogate the idea before announcing it? Or did they anticipate all the problems but ignore them in their desperation to get a cost-of-living announcement out? It also begs the question, why are they so panicked? The answer is probably that it's not just the Government's vibe that has shifted. It's the country's vibe too. It's the middle of this Government's term and the middle of winter and the tail end of a very long and hard recession. The goodwill towards the coalition Government is suddenly depleting. It's possibly recoverable. Summer and an economic recovery should improve things again. But even when we're warm and flush, it won't stop the Government stuffing things up itself if it keeps making weird announcements like this. Watch now for how they get out of this. And they'll have to. They can't be doing this to their own voter base just months out from next year's election.
NZ Herald
3 days ago
- NZ Herald
Hawke's Bay retailers could suffer after ban on card surcharges
'They are going through a rough enough time as it is,' she said. 'The PayWave options are a really quick and easy option for us to go and pay for something, but that might be taken away, because why would the business owner want to pay for that when they can't on-charge? 'We are going to go backwards. 'They will remove the flexibility and the convenience of us just using our phones and going 'ding'.' Pip Thompson on Napier's Emerson St. Photo / Gary Hamilton-Irvine She said, alternatively, business owners would be forced to up prices to absorb the cost. There is no merchant service fee for Eftpos payments, such as when you insert your card. Thompson questioned why banks weren't doing more to support local businesses with reducing the merchant service fee (for which the surcharge covers). 'I think we have cut the pie only in half, and they need to sort the other side of the pie out, so to speak, and go to the banks and say how are you going to help this process?' Banks say they do not receive any benefit from surcharges, and the merchant service fee is required - part of which goes to Visa and Mastercard. 'New Zealand is unique globally in that our domestic card payments network [Eftpos], which is used for Eftpos cards and debit cards when they are inserted, is free for merchants, even though there is a cost to run this network,' an ANZ spokeswoman said. 'However, as in other jurisdictions, there are fees for accepting other means of payment including PayWave, credit and international cards. 'ANZ recovers its costs of providing our customers with payment facilities through a merchant service fee.' She said the average merchant service fee was 1% of a transaction. A merchant service fee is made up of 'scheme fees' and 'interchange fees', as well as some other costs. The 'scheme fees' portion goes to either Visa or Mastercard (dependent on the card used), and the 'interchange fees' portion goes to the bank to cover costs such as fraud prevention, handling disputes, and authorising transactions. The merchant service fee is initially paid to a 'payment acquirer' which can either be a bank or another provider like Windcave. 'Banks don't set or require surcharges - they are added by retailers/merchants at the point of sale,' a BNZ spokesman said. 'If it's more than what they're charged in fees, they keep the difference. Not the bank, not the acquirer, and not the card company.' What local businesses think Vinci's Pizza in Napier owner Vincent Michaelsen said he was supportive of the surcharge ban. 'We do PayWave and we don't do surcharges,' he said. 'I don't think there is necessarily a right or wrong [on whether you do surcharges or not]. 'But my perspective, from a customer angle, is that I just want to make it easy.' He said he felt that was the best decision for his business. 'I think as a business operator, you need to know your costs and make sure that it is covered in the back end.' However, he said the best solution would be tackling the problem from both ends - with no surcharge and also no merchant service fee for businesses. Cool Toys in Napier owner Glen Chan said he expected most retailers would have to build the extra cost into their pricing, after the surcharge ban. 'It tallies up. It really mounts up,' he said, of covering the merchant service fees. He said he offers contactless payments with a surcharge currently, and a problem with potentially removing PayWave as an option in future was that customers liked and were used to it. Adore Collection in Napier co-owner Sally Holyer said they did not charge a surcharge on contactless card payments. 'Yes it costs [us] but we find, especially when it is really busy in the summer in the cruise season, it speeds things up so much that is actually worth us doing.' Gary Hamilton-Irvine is a Hawke's Bay-based reporter who covers a range of news topics including business, councils, breaking news and cyclone recovery. He formerly worked at News Corp Australia.
NZ Herald
3 days ago
- NZ Herald
Luxon living on borrowed time as stagflation looms
While not yet as bad as in the 1970s, the term for this is stagflation, and even the Treasury now warns that 'high-frequency data provides further evidence that growth slowed in the June quarter' and that 'near-term inflation pressures have increased'. Private-sector economic forecasters are even more pessimistic, and the Reserve Bank's Kiwi-GDP forecaster continues to indicate June quarter GDP declined by 0.3%. Massey University's GDPLive indicates the economy continued its decline through July. This is more than 18 months since Luxon purported to unveil his 'plan' and six months since his big 'going for growth' speech in Auckland. In fact, Luxon has no plan of the sort that might transform New Zealand's prospects the way Argentina's President Javier Milei has turned around his country's economy in less than 18 months, as detailed by Richard Prebble on Wednesday. Announcements said to be part of Luxon's 'plan' usually have the appearance of being dreamed up overnight based on focus-group sessions, like banning surcharges on debit, credit and Eftpos payments. While Luxon claimed the ban 'ensures' that a mandated $90 million reduction in credit-card fees would 'flow through to consumers', Finance Minister Nicola Willis was more orthodox in saying businesses would make their own decisions. The surcharge ban is probably good politics, since it will perhaps marginally benefit those using their cards, phones and watches while imposing a tiny cost to those who use cash. But we can only pray that Luxon and Willis understand that shifting $90m from banks to consumers is irrelevant in the context of a $430 billion economy, including the $7.2b the banks made in profits last year. Like so many of the 'announcements' the Government has made in the past two weeks, like the $80m for a new medical school and the reannouncement of $6b of government infrastructure projects, the surcharge ban is, at most, a rounding error. When he speaks of doubling down on his plan, even Luxon surely did well enough at primary-school maths to know that two times nothing is still nothing. Underlining the emptiness of his plan and his approach to politics generally is that the past two weeks of frenetic media activity can be explained by the Beehive knowing that all the major polling companies are currently in the field and expected to release results over the next fortnight. In political strategy, this is known as 'pumping the polls', where populist activity occurs during a polling period to try to score a better number for a candidate or party. Even if this improves the result by only a couple of points, the candidate or party can claim growing support. Luxon had better hope that is what has happened, because on the results of the next fortnight's polls his future as Prime Minister depends. National MPs are increasingly twitchy not so much about the Government's polling, but about National's and Luxon's. As they look around the caucus room, National MPs know that one in six of them may not be back at the next election, based on the past few months of polls. But those set to lose their seats may be the lucky ones, since while the same polls suggest the coalition would be narrowly re-elected by just a seat or two, National would be even weaker in a second Luxon Government than in the current one. Luxon would of course keep his Botany seat but, the way things are heading, National would have no more than a couple of list MPs, and perhaps none. Off the top of the list, Willis and Speaker Gerry Brownlee would probably scrape in – but not comfortably – and Infrastructure Minister Chris Bishop would survive if he retained his Hutt South electorate. But it would be bye-bye for Justice Minister Paul Goldsmith and anyone else relying on a list seat, including any new talent National wanted to attract. Blame for this tends to be directed towards Luxon, who has never polled better than his party, which has also failed to get out of the 30s under his leadership. As preferred Prime Minister, Luxon is usually about level with Labour leader Chris Hipkins. But Luxon's net favourability number has almost always been under zero, often catastrophically so. More people also think the country is heading in the wrong direction than say it is on the right track. Astonishingly, National fell behind Labour this June over who is best to manage inflation and the cost of living. Among voters' top 20 issues, National was ahead only on the economy – marginally – and on law and order and defence. Recent changes to Luxon's media schedule may help a bit. On the narrow question of media tactics, it is better for a Prime Minister to appear on Mike Hosking Breakfast and its lower-rating competitors on a Monday rather than a Tuesday. But Luxon's problems do not so much concern his choice of media and social-media channels and when he uses them. The real problem is that too many swing voters just have a visceral dislike and disrespect of the man, and that he seems incapable of engaging seriously – scripted or unscripted – on issues as they arise, or of talking in more than banalities. Were the economy clearly on the mend, this might not matter as much. But having nothing meaningful to say to Hosking or his competitors and bombarding social-media users with brain-dead messaging about non-existent plans 'starting to work' is not what the times call for. Nor does Luxon do himself any favours by telling everyone how hard he works. No one cares. Some of the greatest leaders in history did the lightest hours. What matters is voters perceiving that a Prime Minister offers some sense of what they want to achieve that is independent from their focus groups, a clear strategy to deliver that objective even if aspects of it are unpopular, and a genuine sense of connection with the country's past, present and future. A Prime Minister should be able to speak knowledgeably about all these things, not revert to childlike slogans under even the softest questioning. Luxon is already living on borrowed time. He had better hope the forthcoming polls buy him a little more time to try again to prove that he has at least some of the attributes his job demands.
