Small business owners may soon need to adjust how they handle debit and credit card transactions. The government has indicated it is considering imposing caps on the surcharges that consumers pay when using their cards. This initiative aims to alleviate financial pressures on households and bring New Zealand in line with recent changes in Australia, which plans to ban debit card surcharges altogether.
What’s Happening?
Commerce and Consumer Affairs Minister Andrew Bayly announced that over the past three months, the government has been reviewing the fees associated with debit and credit card usage. The Commerce Commission has been tasked with providing advice on two key areas:
- Interbank Charges: A proposal to reduce the interbank fee from the current 0.7% to 0.2%. This fee is what banks charge each other for processing transactions, and lowering it could reduce costs for both businesses and consumers.
- Total Surcharge Cap: The possibility of implementing a maximum limit on the surcharges that businesses can pass on to customers using card payments. Minister Bayly expressed particular interest in this aspect, suggesting that changes might be imminent.
“We expect to receive the Commerce Commission’s advice in the next few weeks and plan to make an announcement very shortly,” Bayly stated.
Political Support and Criticism
Former Commerce and Consumer Affairs Minister, Labour MP Duncan Webb, indicated that the previous government had also been exploring ways to reduce these fees. He criticized the high surcharges, especially the 2% fee often charged for contactless payments like PayWave.
“Nothing irritates me more than seeing a 2% fee for using my PayWave,” Webb remarked. “We know that’s not the actual cost of using the system. I hope our consumer affairs minister takes a good look at it and stops more of the gouging by financial service providers.”
Implications for Small Business Owners
For small businesses, these potential changes could have significant impacts:
- Reduced Operating Costs: Lower interbank fees might decrease the costs businesses incur when processing card payments.
- Pricing Adjustments: Caps on surcharges may require businesses to rethink their pricing strategies if they can no longer pass on higher fees to customers.
- Customer Relations: Eliminating or reducing surcharges could improve customer satisfaction, potentially leading to increased sales and loyalty.
However, some businesses might be concerned about absorbing additional costs if they’re unable to recoup fees through surcharges.
What Should Businesses Do Now?
- Stay Informed: Keep an eye out for the Commerce Commission’s recommendations and any official announcements from the government.
- Review Payment Policies: Begin assessing how potential changes could affect your transaction processes and revenue.
- Consult Professionals: Consider speaking with financial advisors or industry associations to understand the best steps forward.
The government’s move to potentially cap or reduce card surcharges reflects a commitment to easing financial burdens on consumers. While this could present challenges for small businesses accustomed to passing on these fees, it also offers an opportunity to enhance customer experience and possibly benefit from increased consumer spending.