logo
Retail NZ Response To Commerce Commission Interchange Fee Decision

Retail NZ Response To Commerce Commission Interchange Fee Decision

Scoop17-07-2025
Retail NZ welcomes the Commerce Commission's decision on interchange fee regulation for the Mastercard and Visa networks.
'Retail payments are a contentious area for retail businesses. We have called for changes in the system, to make it easier for retailers to understand and to enable them to provide better customer experiences and for lower fees' Retail NZ Chief Executive Carolyn Young says.
'While the Commerce Commission has announced interchange fee caps for domestic and international debit and credit card transactions, we are disappointed that commercial credit cards and prepaid cards are not currently included in the new pricing standards. This was a move that Retail NZ called for in our submission to the Commission's consultation last year, saying the focus on Mastercard and Visa was too narrow and only partially addressed the issues faced by retailers and the flow-on effects for customers', Ms Young says.
Retail NZ supported the Commerce Commission's proposal to set lower fee caps for the Interchange component of the payments system.
However, interchange fees account for a little over half the total cost of Merchant Service Fees (MSF) and retailers have concerns about the cost of other components. A reduction in the interchange fees alone will not address the overall costs that retailers pay via MSF. In our submission, we called for the Commission to regulate the total MSF to provide ongoing certainty for our members.
In addition, Retail NZ is welcoming the Commerce Commission's intention to do further work on regulating surcharges to provide a level playing field for all retailers and consumers.
'We will be working with Retail NZ members to respond appropriately to today's decision,' Ms Young says.
For further information or to set up an interview with Retail NZ Chief Executive Carolyn Young, please contact Carolyn on 021 449 452.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

What you need to know about a 150,000-customer banking class action
What you need to know about a 150,000-customer banking class action

RNZ News

time9 hours ago

  • RNZ News

What you need to know about a 150,000-customer banking class action

Photo: ASB and ANZ have rejected an offer to settle a class action suit against them, for about $300 million. Instead, the legal drama continues - and now the country's lawmakers are involved, too. So what is the class action suit actually about, and what's happening now? The class action is for breaches of the Credit Contracts and Consumer Finance Act (CCCFA). Between 2015 and 2019, the law said that a lender that was in breach of its disclosure requirements had to repay borrowers all the interest and fees they were charged during the time when they were not compliant with the rules. The class action claims that between 30 May, 2015 and 28 May, 2016, a coding error in one of ANZ's systems failed to take into account interest that had been accrued and not yet charged. As a result, loan variation letters contained incorrect information. ANZ said it meant customers were undercharged. The class action also claims that between 6 June, 2015 and 18 June, 2019, ASB did not ensure customers received variation disclosure when they requested changes to repayment amounts, dates or frequency, over the phone or in branch. They also say ASB did not provide customers with compliant variation disclosure when requesting other kinds of changes. It has been estimated that, if banks were to lose in court, more than 150,000 customers could be reimbursed a combined total of hundreds of millions of dollars. Customers have been added to the class action on an "opt out basis". All ASB and ANZ customers the court determines to be affected will be represented unless they choose not to be. The action has been in progress for about four years and University of Auckland senior law lecturer Nikki Chamberlain said it was the biggest consumer class action she was aware of in New Zealand history. The banks have already compensated affected customers after reporting the breaches to the Commerce Commission. ANZ first paid customers about $6 million. The Commerce Commission investigated and the bank admitted a breach of its responsible lending obligations and agreed to pay customers another $29.4m. ASB agreed to pay just over $8m. The Credit Contracts and Consumer Finance Amendment (CCCFA) Bill, which is before select committee, includes a retrospective fix that would mean instead of a blanket penalty applying for disclosure breaches between 2015 and 2019, a court would be allowed to decide what compensation was "just and equitable". In 2019, the law was amended to apply to breaches from that point, but this change would apply to breaches before that time, too, if they had not been dealt with by a court already. "Changing the law creates a dangerous precedent for everyone and exposes the plaintiffs to more cost and delay, as well as introducing uncertainty to their established claim," said Scott Russell, the lawyer leading the banking class action. Chamberlain said many consumer protection laws were punitive rather than compensatory. "The reason we have punitive remedial provisions in these consumer-based legislations is to incentivise big players like the banks to invest in their compliance systems. Otherwise what would be the motivation for the bank to invest in their systems? Their money is better spent in growing their lending portfolio… so there's this idea that we want to incentivise banks to self-regulate to some extent. "We want them to be having good practises and disclosing what they need to be disclosing in their lending documents to customers and we need to have punishment that's severe enough they take notice." She said the change could make it uneconomical to pursue the case, and could put litigation funders off from taking action in future in other scenarios. "If you change the remedial provision retrospectively, you are going to increase the cost of evidence that is required and the legal fees required because you're going to have to go through every single breach for every single customer, and go through the factors and that's going to blow the cost out which might make the litigation uneconomical and unviable. "Litigation funders have been funding it. Litigation funders are a good thing. Yes, they do take a percentage on a no win, no fee basis. But what litigation funders do with class actions is they make claims which would ordinarily be uneconomic to pursue economically viable." She said the defendants could use the fact there was a power disparity between them and plaintiffs to their advantage, but litigation funders helped to offset that. "One of my bigger concerns is about the rule of law, retrospective legislation in general is something that is not well looked upon. "In fact, it should not be enacted unless there are extraordinary circumstances. Why is that? Because we need certainty in the law. If people can't rely on the rights and remedies provided by the law at the time of breach, then there's uncertainty in the law and it will absolutely impinge on the integrity of the legal system. And eventually, democracy itself, because it goes to us being able to rely on what our rights are… why would a funder enter the market if there's a concern that big powerful organisations who are defendants in active litigation can lobby the government and they just change the law midway through the proceeding, in their favour?" It would be possible to put a long stop limitation provision in the law to prohibit any future litigation under the old rules, she said, if the concern was about the future liability of other lenders. But Roger Beaumont, chief executive of the New Zealand Banking Association, said the change was needed. "Between 2015 and 2019 any lender who even made a small mistake in the information provided to borrowers, like getting their phone number wrong, could be subject to a draconian provision in the law that, on one interpretation, would make them repay all the interest and fees paid until the error was corrected. That consequence would be totally out of proportion with the technical legal breach, especially if there was no harm to the consumer who was happily enjoying their new home or car thanks to a bank loan. "Modelling from the Reserve Bank shows a potential risk to the financial system of $12.9 billion. The Reserve Bank considered more extreme variations that 'were much more severe' but didn't publish them as they were too 'speculative'. A financial system risk much worse than $13 billion should be concerning to everyone." He said the change would also benefit smaller lenders who could not absorb the cost of legal action. Banking expert Claire Matthews, from Massey University, said if the claim were successful, there was a risk that litigation funders might see it as a way to make money. "They could be exploring other opportunities to see if there is something else that somebody had done." She said the law as it stood "significantly advantaged customers" and "almost encourages them to find a mistake. If you can find that somebody's made a mistake, and let's face it, people do make mistakes from time to time, you could have a very small mistake which is what was the case here and suddenly you don't have to pay any interest for the whole time of the loan? That to me just seems a bit unusual". The Commerce Commission had the ability to apply punitive damages if it had considered it appropriate, she said. Retrospective legislation was not uncommon. "It's kind of two different arguments. Maybe it's bad, but it's happened often enough that suggests that in certain circumstances, it's not unreasonable to do in this case." Claimants in the class action last week offered to settle for more than $300 million. But both banks rejected it. The offer included a cap on liability that was the lesser of either 68 percent of what customers paid in borrowing costs during the breach period, or a small percentage of bank profits. For ANZ the percentage was 3.5 percent of profits from FY16 through FY19. While ASB's offer was 5 percent of profits during the same period. ANZ described the offer as a stunt. Matthews said if the law change went ahead it would have a big impact on the case. "I'm not sure that it would completely kill the case but it would have a substantial impact. I think there would be potential for the case to still progress but the associated penalties and the impact of a decision in favour of the applicants would have less benefits for them and therefore the litigation funders might decide it was no longer worth their while to purse it because the costs would be too great."

Yhat you need to know about a 150,000-customer banking class action
Yhat you need to know about a 150,000-customer banking class action

RNZ News

time9 hours ago

  • RNZ News

Yhat you need to know about a 150,000-customer banking class action

Photo: ASB and ANZ have rejected an offer to settle a class action suit against them, for about $300 million. Instead, the legal drama continues - and now the country's lawmakers are involved, too. So what is the class action suit actually about, and what's happening now? The class action is for breaches of the Credit Contracts and Consumer Finance Act (CCCFA). Between 2015 and 2019, the law said that a lender that was in breach of its disclosure requirements had to repay borrowers all the interest and fees they were charged during the time when they were not compliant with the rules. The class action claims that between 30 May, 2015 and 28 May, 2016, a coding error in one of ANZ's systems failed to take into account interest that had been accrued and not yet charged. As a result, loan variation letters contained incorrect information. ANZ said it meant customers were undercharged. The class action also claims that between 6 June, 2015 and 18 June, 2019, ASB did not ensure customers received variation disclosure when they requested changes to repayment amounts, dates or frequency, over the phone or in branch. They also say ASB did not provide customers with compliant variation disclosure when requesting other kinds of changes. It has been estimated that, if banks were to lose in court, more than 150,000 customers could be reimbursed a combined total of hundreds of millions of dollars. Customers have been added to the class action on an "opt out basis". All ASB and ANZ customers the court determines to be affected will be represented unless they choose not to be. The action has been in progress for about four years and University of Auckland senior law lecturer Nikki Chamberlain said it was the biggest consumer class action she was aware of in New Zealand history. The banks have already compensated affected customers after reporting the breaches to the Commerce Commission. ANZ first paid customers about $6 million. The Commerce Commission investigated and the bank admitted a breach of its responsible lending obligations and agreed to pay customers another $29.4m. ASB agreed to pay just over $8m. The Credit Contracts and Consumer Finance Amendment (CCCFA) Bill, which is before select committee, includes a retrospective fix that would mean instead of a blanket penalty applying for disclosure breaches between 2015 and 2019, a court would be allowed to decide what compensation was "just and equitable". In 2019, the law was amended to apply to breaches from that point, but this change would apply to breaches before that time, too, if they had not been dealt with by a court already. "Changing the law creates a dangerous precedent for everyone and exposes the plaintiffs to more cost and delay, as well as introducing uncertainty to their established claim," said Scott Russell, the lawyer leading the banking class action. Chamberlain said many consumer protection laws were punitive rather than compensatory. "The reason we have punitive remedial provisions in these consumer-based legislations is to incentivise big players like the banks to invest in their compliance systems. Otherwise what would be the motivation for the bank to invest in their systems? Their money is better spent in growing their lending portfolio… so there's this idea that we want to incentivise banks to self-regulate to some extent. "We want them to be having good practises and disclosing what they need to be disclosing in their lending documents to customers and we need to have punishment that's severe enough they take notice." She said the change could make it uneconomical to pursue the case, and could put litigation funders off from taking action in future in other scenarios. "If you change the remedial provision retrospectively, you are going to increase the cost of evidence that is required and the legal fees required because you're going to have to go through every single breach for every single customer, and go through the factors and that's going to blow the cost out which might make the litigation uneconomical and unviable. "Litigation funders have been funding it. Litigation funders are a good thing. Yes, they do take a percentage on a no win, no fee basis. But what litigation funders do with class actions is they make claims which would ordinarily be uneconomic to pursue economically viable." She said the defendants could use the fact there was a power disparity between them and plaintiffs to their advantage, but litigation funders helped to offset that. "One of my bigger concerns is about the rule of law, retrospective legislation in general is something that is not well looked upon. "In fact, it should not be enacted unless there are extraordinary circumstances. Why is that? Because we need certainty in the law. If people can't rely on the rights and remedies provided by the law at the time of breach, then there's uncertainty in the law and it will absolutely impinge on the integrity of the legal system. And eventually, democracy itself, because it goes to us being able to rely on what our rights are… why would a funder enter the market if there's a concern that big powerful organisations who are defendants in active litigation can lobby the government and they just change the law midway through the proceeding, in their favour?" It would be possible to put a long stop limitation provision in the law to prohibit any future litigation under the old rules, she said, if the concern was about the future liability of other lenders. But Roger Beaumont, chief executive of the New Zealand Banking Association, said the change was needed. "Between 2015 and 2019 any lender who even made a small mistake in the information provided to borrowers, like getting their phone number wrong, could be subject to a draconian provision in the law that, on one interpretation, would make them repay all the interest and fees paid until the error was corrected. That consequence would be totally out of proportion with the technical legal breach, especially if there was no harm to the consumer who was happily enjoying their new home or car thanks to a bank loan. "Modelling from the Reserve Bank shows a potential risk to the financial system of $12.9 billion. The Reserve Bank considered more extreme variations that 'were much more severe' but didn't publish them as they were too 'speculative'. A financial system risk much worse than $13 billion should be concerning to everyone." He said the change would also benefit smaller lenders who could not absorb the cost of legal action. Banking expert Claire Matthews, from Massey University, said if the claim were successful, there was a risk that litigation funders might see it as a way to make money. "They could be exploring other opportunities to see if there is something else that somebody had done." She said the law as it stood "significantly advantaged customers" and "almost encourages them to find a mistake. If you can find that somebody's made a mistake, and let's face it, people do make mistakes from time to time, you could have a very small mistake which is what was the case here and suddenly you don't have to pay any interest for the whole time of the loan? That to me just seems a bit unusual". The Commerce Commission had the ability to apply punitive damages if it had considered it appropriate, she said. Retrospective legislation was not uncommon. "It's kind of two different arguments. Maybe it's bad, but it's happened often enough that suggests that in certain circumstances, it's not unreasonable to do in this case." Claimants in the class action last week offered to settle for more than $300 million. But both banks rejected it. The offer included a cap on liability that was the lesser of either 68 percent of what customers paid in borrowing costs during the breach period, or a small percentage of bank profits. For ANZ the percentage was 3.5 percent of profits from FY16 through FY19. While ASB's offer was 5 percent of profits during the same period. ANZ described the offer as a stunt. Matthews said if the law change went ahead it would have a big impact on the case. "I'm not sure that it would completely kill the case but it would have a substantial impact. I think there would be potential for the case to still progress but the associated penalties and the impact of a decision in favour of the applicants would have less benefits for them and therefore the litigation funders might decide it was no longer worth their while to purse it because the costs would be too great."

Almost A Third Of NZ Households Face Energy Hardship – Reform Has To Go Beyond Cheaper Off-Peak Power
Almost A Third Of NZ Households Face Energy Hardship – Reform Has To Go Beyond Cheaper Off-Peak Power

Scoop

time21 hours ago

  • Scoop

Almost A Third Of NZ Households Face Energy Hardship – Reform Has To Go Beyond Cheaper Off-Peak Power

The spotlight is again on New Zealand's energy sector, with a group of industry bodies and independent retailers pushing for a market overhaul, saying the sector was 'broken' and 'driving up the cost of living'. The Commerce Commission and the Electricity Authority has already established a joint task force, after prices peaked in 2024, to investigate ways to improve the performance of the electricity market. The Authority recently announced new rules requiring larger electricity retailers to offer lower off-peak power prices from next year. The government is also expected to make further announcements on the sector. But the question is whether these changes will do enough to help New Zealanders live affordably in dry and warm homes. Some 30% of households face energy hardship. This means they struggle to afford or access sufficient energy to meet their daily needs. Caused by a combination of poor housing quality, high energy costs and the specific needs of vulnerable residents, energy hardship can lead to serious health issues and high hospital admission costs. We know from our own research over the past 18 years that having power disconnected can negatively affect health and wellbeing. People have told us that not being able to afford enough power to keep warm made them more likely to get sick and exacerbated existing health conditions. They described mental distress from unaffordable electricity and the threat of disconnection. Research participants used words such as 'stressed', 'anxious' or 'depressed'. They also spoke about having to choose between food and power bills. If power is disconnected, there can be additional costs from losing food in the fridge and freezer, as well as the problem of paying disconnection and reconnection fees when people already can't afford the bill. What's driving up power bills? In 2024, a 'dry year' that increased the value of hydro generation, combined with lower-than-usual wind and declining supply of gas, resulted in wholesale electricity price spikes. But these winter shortages aren't the only factor pushing up power bills. Electricity bills reflect several costs along the supply chain from generation to getting the electricity to the sockets in our homes. A new regulatory period for lines charges from April 2025 increased bills by $10 to $25 per month, depending on where you live. At the same time, low fixed daily charges are being phased out. This means the cost of being connected to the grid is the same no matter how much power is used. It is the poorest New Zealanders who are being hardest hit. The lowest income households spend a bigger proportion of their income on power compared to higher income households. Having electricity prices increase faster than inflation will put even more families at risk. The average household electricity bill was up 8.7% in May 2025 compared to June 2024. According to a recent Consumer NZ survey, 20% of respondents said they struggled to pay their power bill in the past year. Tackling hardship The new Consumer Care Obligations might help reduce some of the risks. Power companies must now comply with these obligations when working with households struggling to pay their bills, are facing disconnection or have someone in the home who is medically dependent on electricity. If households feel their power company is not meeting these obligations, they can contact Utilities Disputes, a free independent electricity and gas complaint resolution service, or the Electricity Authority. But multiple changes are needed to address the different parts of the energy hardship problem. Improving home energy efficiency through schemes like Warmer Kiwi Homes is crucial. Introducing an Energy Performance Rating for houses would make it easier for home buyers and renters to know how much it will cost to power a home before they move in. This would also help target energy hardship support. The government can also make electricity more affordable by supporting not-for-profit power companies. Another good move would be to help more households to install rooftop solar by providing access to long-term low-interest finance. Lower prices during off-peak hours are a good start. But it is clear the sheer size and complexity of the problems mean government action, with community and industry collaboration, needs to go beyond slightly cheaper electricity when there is less demand. Disclosure statement Kimberley O'Sullivan receives funding from a Rutherford Discovery Fellowship administered by the Royal Society Te Apārangi, the Health Research Council, the Ministry of Business, Employment, and Innovation, and Lotteries Health Research.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store