Carolyn Young: Retail NZ Chief Executive on the Commerce Commission announcing new regulations for interchange fees

Retail NZ is criticising the Commerce Commission's regulatory change to card payment fees.

The Commission today announced new regulations on interchange fees, reducing charges to businesses for taking Visa and Mastercard payments.

Retail NZ Chief Executive Carolyn Young says it's a complex issue - and these changes won't address everything.

"This is one part of the merchant service fee, there's about 5 or 6 fees depending on how you structure your payment portfolio that may cut the merchant service fee. The Commerce Commission has said they won't get that fee down to one percent maximum."

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Episode Transcript

Speaker 1 (00:00):
Credit cards sur charges, no one likes them. The Commerce
Commission has decided to lower the cost of interchange fees
for Visa and Master cards. They reckon this will save
businesses around ninety million bucks a year, and that could
save each business five hundred dollars on average. Carolyn Young
is Retail and Z chief executive with me this afternoon.

Speaker 2 (00:19):
Hi, Carolyn kider Ran, Thanks for having me on board.

Speaker 1 (00:22):
So is this going to make a major difference to businesses?

Speaker 2 (00:27):
Look, it's kind of too really to tailers and it
you know, what we really want to make sure that
we see is that we do see those lower fees
come through in the bank statements for retailers, and then
what consumers are going to want to see is that
we'll see lower surcharging to reflect that. So that would
be the one one opportunity for everyone. And the key
thing is how do we make sure that that's happening.

(00:49):
That's going to be the critical.

Speaker 1 (00:50):
Factor, and we won't know. I guess the proof will
be in the pudding. But the fact that the ComCom
has already stepped back from because remember the last time
we spoke, it was two hundred and sixty million dollars
and save things. They were thinking, now we're at ninety
that presumably that's pressure from the industry.

Speaker 2 (01:07):
Look when you look at the report they put out today,
there are some differences between what they had proposed in
their draft decision to where their final places position, and
so that's part of it. So they haven't addressed any
of the commercial credit card fees that's left uncapped and
that could be in that quite a high percentage of things.

(01:30):
And the international cards they some of those cards, the
debit cards for international fees they are still quite high.
So overall there's been a little bit of movement up,
so you know, less savings for the whole economy, so
for retailers and for consumers. And what we do need

(01:52):
to make sure is that this is one part of
the merchancy the fee. There's about five or six fees,
depending on how you've struck your payment portfolio, that make
up the merchant service fee. The COMMICS commissioners said they
want to get that fee down to one percent maximum.
Our recommendation to the COMMICS commission and our submissions was
that regulate the total fee, make it one percent, make

(02:14):
it really flat and easy for everyone. Then you can
just implement a standard to charge for it be a
maximum of one percent, and you know, everyone knows where
they stand because it's really really complicated.

Speaker 1 (02:25):
And we would get that too, because at the moment,
some retailers are charging two and a half percent of
charges and more for what the ComCom has said that
should be a maximum of point zero point seven percent
debit card to charge retailers clipping the.

Speaker 2 (02:37):
Ticket here or what. No, you're just talking about the
interchange fee, which is only one part of the merchant
service fee. So depending on the type of card that
you're that the customer is paying with, the bank that
they come from, who your payment system runs through, you know,
is it a master Card, is it a Visa? Is

(02:59):
it an NX overseas card? You know, all of those
factors all mean that it can be a different fee
that's supplied through. So debit is different to credit, and
it's different if it's MX versus master Card or Visa,
and it's different if it's an overseas card. So there's
lots of permeations that roll through. So understanding that whole

(03:19):
piece is super complicated, and what retailers and merchants really
want is a simplified system that everyone can understand. So
great clarity you reckon all will that'd be great, Like
we would all know that the total fee you might
be charged on average would be one percent. And therefore,
if a business wanted to put in place a surcharge,

(03:39):
they would know that was a seur charge that they
could put in place. Consumers would also they know that
that's all that they could be charged.

Speaker 1 (03:46):
Appreciate your time. Carol and Young Retailing is the chief executive.

Speaker 2 (03:49):
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