Small businesses urge banks to reduce paywave fees permanently

Small businesses, many of which are already struggling after the COVID-19 lockdown, are crying out for banks to permanently reduce paywave fees.

While consumers can't get enough of the technology, for many companies they are simply too expensive and are cutting into their already small margins.  

But it's not just businesses that are paying the price, in 2015 economic consultancy firm COVEC found a hidden cost passed on to consumers of $380 million a year and it's forecast to almost double by 2025. 

Doris Mousdale owns Arcadia Book Store in Auckland and her business is one of many that features a 'no paywave' sign. 

"We pay for electricity, rent, staff, paper bags, you name it, we pay for it and then we're paying an additional charge on our bank charges," Mousdale says.

Joana Legat, the owner of fragrance store Isabel Harris says you only need to shop around Auckland "and you'll see any little sole trader pretty much all of them have no paywave". 

That's because every time you swipe your paywave card the business is charged a percentage of the customer's purchase as a fee. 

Retail New Zealand found in 2019, that fee was on average 1.1 percent for a debit card and for a credit card, 1.5 percent.

"It seems small but it adds up and I think if we got the figures from the banks on just how much in total, paywave brings into them I think people would be quite amazed," Mousdale says.

It's estimated total electronic payments will cost retailers between $2.9 billion and $3.8 billion in the 10 years from 2015-2024.

During lockdown, the big four banks waived the paywave fees for debit cards but they were due to be reapplied from Wednesday. 

ANZ and BNZ have agreed to extend the free fees period until the end of July, while Westpac customers were always promised to have debit card fees waived until September 21. 

ASB customers are out of luck.

Rebecca Fairbrother has just started a businesses advocacy group to try and help merchants get the fees lowered permanently.

"Bringing fairness is what I want to see."

She says the system is perplexing and many businesses simply aren't aware of the options available to them. 

"Definitely getting merchants a seat at the table to engage with credit card companies and banks is really important."

A discussion to ensure New Zealand's small businesses can stay on their feet amid the economic recovery.