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Burger King drops contactless in New Zealand

Categories : Cash is efficient, Costs of cash versus costs of electronic payment instruments
July 3, 2018
Tags : Consumers, Contactless, New Zealand, Retailers
Due to exorbitant interchange and contactless service fees, a growing number of merchants are abandoning tap-and-go at checkout in New Zealand.
Communication Team / Equipo de Comunicación

This post is also available in: Spanish

New Zealand faces some of the highest fees for merchants when it comes to contactless payments. Indeed, these have become so high that even major fast food chain Burger King has decided to ditch it.

Paywave, the country’s contactless service provider, charges 1.2% for contactless debit and 1.6% credit card purchases. In comparison, these fees amount to 0.6% in Australia and 0.2% in the UK.

Consumers have quickly become accustomed to this payment method and, although merchants always do their best to accommodate customers’ needs, the costs greatly outweigh the benefits – even for major food chains.

One small retailer admitted paying $23,000 a year to use Paywave’s services. Speaking to the New Zealand Herald, general manager of public affairs for Retail NZ Greg Harford stated, “Merchant service fees in New Zealand are too high. There’s no obvious reason for charges here to be two or three times more than in Australia or the UK.”

Services fees are imposed by banks and card companies – which are separate adding another level of complexity – yet consumers are rarely aware of these hurdles. This lack of transparency has become an issue, particularly when observing what has happened in the EU following the 2015 regulation on interchange fees: albeit a positive consumer protection initiative, it only conceals costs even further, putting the burden on consumers.

Transparency is key as well as freedom of choice. Navigating the payments jungle is complex and the related costs are seldom communicated. In New Zealand’s case it seems that it will take a critical mass of retailers to make a change, hopefully leading to greater transparency overall.

This post is also available in: Spanish