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ComCom calls for banks to pick up the pace on payment options

The Commerce Commission has issued an Open Letter to participants of New Zealand’s retail payment system setting its expectations of the industry to deliver a more competitive environment that can give Kiwis new options to pay for goods and services.

Commission Chair, John Small, said the regulator had observed a lack of innovation in payments between bank accounts, one of the cheapest payment methods available to Kiwis.

“More efficient payments between bank accounts will reduce both merchant and consumer reliance on the likes of Visa, Mastercard, and American Express and the costs associated with these types of payment methods,” Dr Small says.

Bank transfers are not new and many consumers pay bills this way – but the Commission wants to see this system used to support better ways to pay online and in-person.

Dr Small says there are numerous examples of this working successfully overseas with the use of QR codes and mobile applications that facilitate new in-person payments, and that this approach is complementary to the Government’s development of a Consumer Data Right (CDR) regime.

“Through our work to date, we have realised the value of a regulatory backstop to help create an environment where new entrants can innovate. Freeing up payments between bank accounts is key to enabling this.

“For smaller businesses who are subject to higher fees to accept card-based payments this is particularly appealing. It means they could enjoy lower payment costs and reduce – or even remove – the need to surcharge to recoup fees – a win-win for both them and their customers.

“We acknowledge that the industry has demonstrated some progress in the payments space, but are concerned about the length of time it’s taking to see this realised for the benefit of Kiwi consumers and businesses. Banks need to pick up the pace and we think a regulatory backstop would encourage them,” Dr Small says.

Next month the Commission will begin formal consultation on whether to recommend to the Minister the need to exercise powers that would enable it to ensure this innovation happens in a timely manner.

 

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