Retailers, banks and credit card companies have clashed again over whether new rules are needed to control the fees shopkeepers pay to accept credit and debit cards.

The interchange fees, which cost retailers about $300 million a year, are being examined by the Ministry of Business, Innovation and Employment (MBIE).

The flipside of any intervention could be that credit card reward schemes become less generous for consumers.



Retail NZ has estimated Visa, Mastercard and banks together take an average clip of 1.7 per cent on credit card transactions and an average fee of 1 per cent on contactless debit card transactions.





READ MORE

* Shake-up for fees on the cards

* New survey compares credit card reward schemes

* Shoppers told to 'game the system' to maximise loyalty points

BRENDON O'HAGAN/FAIRFAX NZ Retailers complain they are footing the bill for generous loyalty schemes offered by credit card companies.



Policy manager Greg Harford said that was double or triple the cut they took in Britain and Australia.

The fees were pushed up by the rewards programmes that credit card companies offered consumers for their spending, he said.



The lobby group said in a submission to MBIE that the law should be changed, so retailers would be allowed to chose exactly which cards they accepted and could "steer" customers towards cheaper forms of payment.

At the moment, if shops accept one type of Visa card, for example, they had to accept them all, Harford said.

KRIS DANDO/FAIRFAX NZ Countdown says card fees are retailers' third highest expense, after wages and rent.

Australian-owned supermarket group Countdown also weighed in on the card companies, arguing the country's payment systems were "economically inefficient and inequitable".

But it called for a "graduated response" from regulators, starting with rules to increase the transparency of charges.

Card fees were the third highest cost of doing business for retailers – after wages and rent – but retailers had "very limited negotiating power" over them, it said.

"We believe there is currently a strong case for government intervention, and this will likely grow over time, particularly with the growing use of contactless scheme debit cards," Countdown said in its submission.

Scheme debit cards refer to cards issued by the likes of Mastercard and Visa, and are distinct from eftpos cards issued by the banks.

One of the concerns of retailers is that Visa and Mastercard may start to charge interchange fees on all scheme debit card transactions if the competition now provided by eftpos cards fades away.

At present, Visa and Mastercard only charge those fees for contactless debit transactions, or if cards are used over the phone or online.

Countdown said it expected the "market dynamics" would shift dramatically as eftpos use continued to diminish.

"In the absence of regulation and competition from an eftpos network, it is entirely plausible that interchange fees will spread from credit and contactless debit cards to swiped or inserted scheme debit transactions," it said.

Visa appeared to offer an olive branch on that issue.

The company said it would not introduce interchange fees on either "swiped" or inserted-chip transactions "under current market conditions".

Harford said that commitment was "really good to hear".

Visa stressed the importance of customer choice in its submission and said it supported transparency over fees.

It disagreed there was any "market failure" in the credit and debit card markets and said it did not believe there was a case for regulatory intervention.

Retailers have been allowed to impose a surcharge since 2009 to recover the costs they incur accepting card payments.

The New Zealand Bankers Association said "a premature regulatory response" could have unintended consequences. There was a risk that any regulated cuts to interchange fees would not be passed on by retailers to consumers, and could "inhibit innovation", it said.

Ministry of Business, Innovation and Employment spokeswoman Barbara Crocker said the ministry had prepared advice for ministers, who would be making decisions "in due course".