Latest / Best of Business / Carolyn Young: Retail NZ CEO on Australia banning card surcharges

Transcript

Carolyn Young: Retail NZ CEO on Australia banning card surcharges · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from Newstalk ZB. Follow this
• 0:13
  Speaker 1: and our wide range of podcasts now on iHeartRadio. Australia's
• 0:17
  Speaker 1: ban on card surcharges came into force. You know, that
• 0:20
  Speaker 1: pesky charge that you have to pay if you use
• 0:22
  Speaker 1: your credit card or contactless payment. Our government tried to
• 0:25
  Speaker 1: do the same, but it was scuttled by the coalition partners.
• 0:27
  Speaker 1: So is this something that we should be revisiting? Retail
• 0:30
  Speaker 1: New Zealand CEO Carolyn Young is with me now. Thank
• 0:33
  Speaker 1: you so much for your time. Good morning. Morena Francesca.
• 0:37
  Speaker 1: So does... Doing a straight ban, is it as simple
• 0:41
  Speaker 1: as it sounds? No, it's not as simple as it sounds.
• 0:45
  Speaker 1: And look, you indicated that Australia have just done this,
• 0:49
  Speaker 1: and there's reports from Australia, both via ABC and by Sunrise,
• 0:54
  Speaker 1: the show, and they're talking to retailers and hospitality business owners,
• 0:59
  Speaker 1: and they have increased prices because they can't continue to
• 1:03
  Speaker 1: absorb more fees. So, The key thing is that these
• 1:07
  Speaker 1: fees are called a merchant service fee. They still exist,
• 1:09
  Speaker 1: whether or not they're passed on to a consumer or not.
• 1:13
  Speaker 1: And in such a tight environment, you know, everyone's struggling.
• 1:16
  Speaker 1: Consumers are struggling. Businesses are struggling. That 2% or 2.5%
• 1:21
  Speaker 1: or 1% can make a difference around whether a business
• 1:24
  Speaker 1: survives or doesn't survive. And small businesses really struggle. So
• 1:28
  Speaker 1: Australians have, businesses have actually increased prices, which is what
• 1:32
  Speaker 1: we've told Select Committee and what we've told the Minister
• 1:35
  Speaker 1: will happen if that's put in place in New Zealand.
• 1:39
  Speaker 1: What we've always said is that get the Commerce Commission
• 1:42
  Speaker 1: to do the work they were always going to do,
• 1:44
  Speaker 1: which is to do a full piece of research around
• 1:47
  Speaker 1: how those fees play out for every type of business
• 1:50
  Speaker 1: and every type of card, because all the different cards
• 1:54
  Speaker 1: and the different ways to pay have different fees. And
• 1:56
  Speaker 1: then we can find out where the right level would
• 1:59
  Speaker 1: settle And our understanding from conversations with the Commerce Commission
• 2:03
  Speaker 1: is that they're thinking that a cap on a surcharge
• 2:06
  Speaker 1: is probably much fairer because then everybody understands where they
• 2:10
  Speaker 1: can be. So if they've done the research to understand
• 2:13
  Speaker 1: where the average fee sits, say it's at 1%, there's
• 2:16
  Speaker 1: a cap on at 1%. A consumer knows if there's
• 2:18
  Speaker 1: going to be a surcharge, it's 1%. A business knows
• 2:21
  Speaker 1: that's all they can charge or they can charge less.
• 2:23
  Speaker 1: And I think that would be a fairer way around
• 2:27
  Speaker 1: because then that's basically saying to consumers, if you want
• 2:31
  Speaker 1: to pay via this method, then this is the fee
• 2:33
  Speaker 1: that's going to apply because we can't absorb it anymore.
• 2:37
  Speaker 1: Some businesses in Australia are starting to look at discounts
• 2:40
  Speaker 1: for cash. So that's other alternative ways in which you
• 2:43
  Speaker 1: can encourage people to pay by different methods. These days
• 2:46
  Speaker 1: you turn up places and they don't want your cash.
• 2:49
  Speaker 1: There is a bit of that in some places. There's
• 2:51
  Speaker 1: been sort of a move around people going, oh, it's
• 2:54
  Speaker 1: really annoying having to deal with actual money. So we
• 2:58
  Speaker 1: know that there is a cost of these fees for retailers,
• 3:01
  Speaker 1: that it does eat away at their profit margin. Yeah, absolutely.
• 3:05
  Speaker 1: And so putting a ban on surcharges doesn't put a
• 3:08
  Speaker 1: ban on the fees. So the reality says to you,
• 3:12
  Speaker 1: if a business has to charge a surcharge to be
• 3:14
  Speaker 1: able to cover the cost, the reality is they're probably
• 3:17
  Speaker 1: going to increase the prices to be able to cover
• 3:19
  Speaker 1: the cost if there's a ban on surcharges. Now, The
• 3:21
  Speaker 1: surveys we did with our members told us that and
• 3:24
  Speaker 1: that's what we've told the government and that's what we've
• 3:26
  Speaker 1: put in our submissions. So if you put a price
• 3:30
  Speaker 1: increase up, it doesn't matter who pays and how they pay,
• 3:33
  Speaker 1: everyone pays the price increase. So if you pay by
• 3:36
  Speaker 1: FPOS or debit, insert your debit card, there's no fees
• 3:40
  Speaker 1: to a merchant. So it would mean that those are
• 3:44
  Speaker 1: free and if you pay by cash, there's no fees.
• 3:47
  Speaker 1: So the challenge is that those people are also paying
• 3:52
  Speaker 1: an increased price regardless of the method that they pay.
• 3:56
  Speaker 1: I imagine you're going to be watching. Sorry. Yeah, I
• 3:59
  Speaker 1: was just going to say 10 years ago in 2016, 43, 44%
• 4:03
  Speaker 1: of transactions were paid by credit card or contactless. Now
• 4:09
  Speaker 1: that 72% of transactions that go through across New Zealand
• 4:14
  Speaker 1: on average are paid by contactless transactions. So, you know,
• 4:18
  Speaker 1: through your wallet. Substantial, isn't it? Yeah. It's substantial. So
• 4:22
  Speaker 1: it's a big switch in transactions that incur a cost
• 4:26
  Speaker 1: to the retailer. Whereas previously, you know, it was much less.
• 4:31
  Speaker 1: I'm sure that you're going to be keeping a very
• 4:32
  Speaker 1: close eye on what is happening in Australia. Carolyn Young,
• 4:36
  Speaker 1: thank you so much. That was Retail New Zealand's CEO there.