Retail payment systems issues paper

Retail payment systems are used to transfer funds from consumers to merchants in exchange for goods and services. They include credit and debit cards, the EFTPOS system, as well as cash, cheques and bank transfers.

In February 2016, the Government asked us 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. In particular, we asked:

• Are consumers and merchants benefiting from ongoing innovation in payment systems?
• Are card payment systems being used efficiently?
• Are consumers and merchants bearing a fair share of the costs?

We provided the Government with advice in July 2016. The Government now wishes to test our analysis with the public through the attached issues paper. This issues paper does not consider options in any great detail. Retail payment systems are extremely complex and it is important to fully understand the issues before the Government decides whether to proceed any further. While the Government is not at the stage of considering options, it is also important to bear in mind that if we proceed to that stage, any potential solution would need to be tested against the harm it is designed to address and that all the consequences are taken into account.

Submissions received

The issues paper called for public submissions by 2 February 2017. We received 46 submissions representing views from card schemes, banks, merchants, consumer representatives, and other industry representatives. Redactions have been made to some submissions subject to the Official Information Act 1982. Submissions are in alphabetical order.