More voices call on banks to cut cost of contactless pay

Pressure is mounting on the banks to drop the fees they charge merchants for contactless payments in a bid to encourage more to sign up for the service, which would mean fewer people having to touch keypads.

Greg Harford, chief executive of Retail New Zealand, yesterday joined Mark Rushworth, Lance Wiggs, Dean Hall and other entrepreneurs calling for the fees to be removed during the coronavirus pandemic.

Harford told Newstalk ZB the World Health Organisation had backed contactless payment options as a good idea to avoid people getting sick amid the outbreak.

“Contactless technology means you are not exposing yourself to as many germs.”

But he said many retailers still don’t offer the service because of concerns over cost.

“There is a perception of cost. Sometimes that is more perception than reality. But we are certainly encouraging retailers to look closely at their costs.”

Harford said on average merchants paid around 1.1 per cent to 1.2 per cent of each transaction for contactless payments.

“Which doesn’t sound like a lot but when you operate in an environment where the average net margin is only 3.6 per cent it adds up.”

Harford said it was the banks which set the merchant fees.

Retail New Zealand had also been calling for more transparency on the fees for some time.

Commerce Minister Kris Faafoi has been putting pressure on the industry to bring down interchange fees — the fees banks pay each other — and has warned he will regulate if they aren’t reduced.

Harford said Visa and Mastercard introduced some changes to fees last year and it was waiting to see if this flowed through to retailers.

“We haven’t quite seen that come through yet.”

There have also been suggestions that the transaction limit be raised from $80 to $200.

Harford said almost all transactions were under the $80 limit.

“Most transactions would be captured by that threshold. There is certainly always room for upping that a little bit.”

But he said that was ultimately up to the banks and how much security risk they were prepared to take on in case of fraudulent activity.

The Herald has requested comment from the banks.