Surcharge ban could raise prices: owner

Otago Daily Times

2 days ago

A Dunedin business owner says a ban on in-store surcharges could result in higher prices for all her customers — regardless of how they pay.
"I can't really see any other way around it — our choices are to increase prices or to take away the ability for people to PayWave or use credit card," Bin Inn Dunedin co-owner Monique Beaumont said.
Commerce and Consumer Affairs Minister Scott Simpson announced late last month the government planned to ban some surcharges for in-store payments by May next year.
The ban would cover most in-store payments made using Visa and Mastercard, including contactless and eftpos, but not online payments, foreign-issued cards, travel cards or cards issued by other networks.
Ms Beaumont said a ban could reduce the level of choice customers had available.
The wholefood and specialty grocery store, in Crawford St, had a 2% surcharge on transactions made with credit cards and PayWave — an "avoidable cost" customers could choose to take on for themselves, she said.
Their bill for offering the transaction services was not insignificant, and could get "a lot higher" if more people started using them once the surcharges were banned.
This could mean putting their prices up, which would also make them less competitive with the likes of supermarkets.
"For a lot of our customers, they don't necessarily even have a PayWave option or a credit card, so they don't want to be charged for it through our pricing or anything else."
The total rate the business was charged by its bank could range between 2.75% and 4%.
The Commerce Commission last month issued a decision to reduce the interchange fees paid by New Zealand businesses to accept Visa and Mastercard payments.
This would reduce the estimated $1 billion annual cost to businesses by about $90 million a year — saving the average small business about $500 each year in fees.
But Ms Beaumont said interchange fees were a "really small" portion of the total fee her business paid to the bank.
The conversation needed to go a step higher than just the retailer, she said.
Mr Simpson said interchange fees were "the biggest part of the costs businesses face" for accepting Visa and Mastercard contactless and credit card payments.
The ban on surcharging would help ensure businesses passed these savings directly on to consumers, he said.
"As part of this change, the Commerce Commission will work on improving the information provided to businesses about their payment fees.
"With better information, businesses should be able to negotiate better deals and reduce their costs even further."
Commerce Commission head of payments Matthew Lewer said the price a business paid to accept Visa and Mastercard payments depended on the type of plan chosen.
Interchange fees made up 60%, or $600m, of the $1b it cost New Zealand businesses to accept Visa and Mastercard payments, Mr Lewer said.
"The interchange fee caps are a meaningful step, but we are committed to ongoing oversight and further action to ensure that our retail payment system better meets the evolving needs of all New Zealanders."
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