Retail payment system

About the retail payment system

The retail payment system facilitates the transfer of funds from consumers to merchants in exchange for goods and services. The retail payment system is constantly evolving and comprises of various retail payment methods like card products, cheques, cash, bank transfers and more recently, Buy-Now, Pay-Later products.

Card payments are the most common payment method in New Zealand and comprise of debit (including EFTPOS) and credit card payment products. Unlike the cash payments, the card payment system is complex web of technical infrastructure, arrangements and standards involving a number of intermediaries. As a result, the cost of accepting card payments has become a significant overhead for merchants.

Since 2016, the Ministry of Business, Innovation and Employment (MBIE) has been working with the payments and banking industry to:

• ensure that New Zealand’s existing the system is operating in the interests of New Zealand consumers and businesses
• facilitate new ways of making payments, and allow consumers to securely share their banking data with trusted third-parties, including through the Payments New Zealand-led API Centre. (such initiatives are commonly referred to as ‘open banking’).

API Centre website(external link)

Read more about the development of a consumer data right to support open banking initiatives in New Zealand:

Consumer data right

Retail Payment System Act 2022

In May 2022, the Retail Payment System Act was passed. It includes a range of measures to promote competition and economic efficiency in the retail payment system to ensure that it delivers long-term benefits to consumers (including businesses) and merchants.

The Act sets out the following:

• a process and factors to determine what parts of the retail payment system should be designated for regulation
• that the Commerce Commission can issue standards for information disclosure, pricing or access
• that the Commerce Commission can make directions regarding the rules of designated networks
• the possibility of regulating merchants’ payment surcharges in order to prevent excessive surcharging
• enforcement and functional powers of the Commerce Commission
• initial designations of the Mastercard and Visa credit and debit networks
• an initial pricing standard that requires fee reductions for transactions on the Mastercard and Visa credit and debit networks.

All of these provisions came into force immediately, except for the initial pricing standard which was delayed by 6 months to allow for the VISA and Mastercard networks to implement fee changes. The initial pricing standard came into force on 13 November 2022.

The Act is available on the government legislation website. 

Retail Payment System Act 2022(external link)

More information about the Bill's progress through the House can be found here:

Retail Payment System Bill(external link) — New Zealand Parliament

Government policy decisions

In April and June 2021, Cabinet agreed to establish a new regulatory regime to:

• Require reductions in interchange fees as soon as possible
• Enable direct intervention by the Commerce Commission using a broad suite of powers to regulate different participants, or classes of participants, in the retail payment system. This will ensure the regime is flexible and durable to oversee retail payments for the foreseeable future.

If you have any questions about the review, or the consultation process, please contact competition.policy@mbie.govt.nz.

Further information

In December 2020, MBIE released a discussion paper exploring issues and options for regulating merchant service fees.

The issues paper called for public submissions by 19 February 2021. We received 30 submissions representing academics, banks, card schemes, consumer representatives, merchants, non-bank acquirers, payment infrastructure providers and other industry participants.

View the submissions to the discussion paper(external link)

Submitters who wished to remain anonymous are referred to as ‘anonymous submitter’. Redactions have been made in accordance with the Official Information Act 1982 and the Privacy Act 1993 and when content may be commercially sensitive. 2 submitters requested for their submissions to remain confidential. These submissions have not been published.

In April 2018 Payments New Zealand updated the Minister of Commerce and Consumer Affairs on the work the industry is undertaking in response to Hon Jacqui Dean’s letter of August 2017.

Letter from Payments New Zealand to Hon Kris Faafoi [PDF, 305 KB] 

Hon Kris Faafoi’s response to Payments New Zealand [PDF, 99 KB]

The then Minister of Commerce and Consumer Affairs, Hon Jacqui Dean, wrote to Payments New Zealand, the industry body for payments.

Hon Jacqui Dean’s update to Cabinet on retail payment systems [PDF, 146 KB] 

Hon Jacqui Dean’s letter to Payments New Zealand [PDF, 61 KB] 

2016 consultation on retail payments system

In February 2016, the Government asked MBIE to examine whether New Zealand’s retail payment systems — as they operate at present and as they may develop in the future — are producing good economic outcomes.

We released an Issues paper addressing these questions in October 2016.

Retail payment systems in New Zealand — Issues Paper [PDF, 1.1 MB] 

View the submissions on the Issues Paper