Brad Olsen: Infometrics Principal Economist on the Commerce Commission's plan to cap PayWave and online credit card fees

One expert has voiced approval with the Commerce Commission's plan to regulate PayWave and online credit card fees.

The watchdog says capped fees could save Kiwis $250 million dollars, from the $1 billion a year they spend in-store and online. 

Infometrics Principal Economist Brad Olsen says these changes are neceesary.

LISTEN ABOVE

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
Now the Comments Commission, as we've discussed in the show,
reckons the Keywis pay about one billion dollars a year
on payWave and online credit card fees, and the ComCom
wants to cap the fees. Reckons it could save key
Wes two hundred and fifty million dollars of that billion
every single year. Brad Olson is Infametrix principle economist day
Brad good evening. High time for a crackdown, isn't it?

Speaker 2 (00:18):
Well, it seems to be. I mean, to be fair,
I sort of thought we went through it. It's a
year or two back when all of our credit card
earning options got slashed back and there was all this
talk of greater regulation, But I certainly haven't seen it
going around the place. Every time you go to pay
for something, I've got to figure out which of the
cards in my wallet I can use as which one's
going to charge me the most? You know, which hand

(00:40):
written sign at the CAFA L restaurant I I have
to pay. And I think the challenges is that, having
been around the world quite a lot so far this year,
we do seem to be a lot more backwards in
our thinking around payment systems. You know, many other parts
of the world you struggle to see a card these
days because people are using their phones or just tap
their watches or whatever. In New Zealand, you're trying to

(01:02):
figure out if you're using your f cost you didbit
your credit which one and all of that I think
creates you know, greater productivity challenges and cost for kiwis.

Speaker 1 (01:10):
Yeah, So is there going to be Are there going
to be any unintended I'm always I'm always reluctant to
go in for regulation unless it really is warranted, right,
because of things that can happen as a result. Is
there any unintended consequence that I'm not seeing here?

Speaker 2 (01:24):
Yeah, I mean it's a fair question to ask, you know.
You know, one of the payment providers has already said, look,
you know, they don't think it will be particularly useful.
They talk about all of the things that they've already funded,
the fact that you know, we've got good network reliability,
you know, some of the anti fraud measures that they
bring in, the fact that often you can get you know,
a fair bit of your money back if you are scammed.

(01:45):
That's important. I don't think that we should lose it
though the idea here isn't that you make no money
at all from these transactions, is that you bring it
down a bit, so maybe businesses can absorb that cost
better and provide that sort of option out there Kiwi.
So yes, I think there are some unintended consequences, But
I really do struggle with the idea that the rest

(02:05):
of the world can do this and New Zealand can't.
Maybe we're a little bit too small, but it really
does seem like a big point of stration. It's not
business's fault, you know. They often point out they would
love to be able to provide that convenient option through
to kiwis, but it costs them and they've got to
somehow pass that on. But like I say, I'm really
a little bit almost surprised and confused. I thought we
had this conversation a few years ago, we decided we'd

(02:28):
do something about it. Nothing really seems we've changed as
Get on.

Speaker 1 (02:33):
Let me explain to you what happened a couple of
years ago. The law passed a couple of years ago
that gave them the possiblity, gave them the options, gave
them the tools. This is the Commis Commission to be
able to do this right, and I think they kind
of put everybody on notice and they were expecting some
sort of voluntary conduct, you know, and then nothing changed,
and so now they're taking the steps to actually force it.

(02:53):
Isn't that basically why you feel like you're having the
same conversation wise.

Speaker 2 (02:57):
Well, I think that's definitely part of it. I think
it's also because there are so many flipping fees across
the place, so I mean back a couple of years back.
The first thing I think the change is what they
call the interchange fees that has come down. But now
that this sort of proposal they're looking at is what
I understand is around the schemes fee, so goodness knows
how many other sort of hidden things there that are

(03:17):
down there. But it does seem to be a bit
of a mirror go around. I'm certainly not feeling as
a consumer like we get a good deal out of it.
Local businesses don't feel like they're getting a good deal
out of it. So it does seem like it's high
time to do something about. Brad.

Speaker 1 (03:29):
Good to talk to you, mate, as always really appreciated.
That's Brad Olson infa metric principle economist

Speaker 2 (03:34):
For more from Heather Duplessy Allen Drive, Listen live to
news talks it'd be from four pm weekdays, or follow
the podcast on iHeartRadio