New Zealand First has found a surprising ally in Treasury in its campaign against bank credit card fees.

The party’s Commerce Spokesperson, Fletcher Taubuteau, has been campaigning against the size of the fees that the banks charge merchants to process credit card transactions.

The NZ First annual conference called for “robust action” against credit card companies over the fees.  

Tabuteau estimates that each electronic parking machine in the main centres collects $700 a year in transaction fees.

As we also have some of the highest credit card transaction fees in the world, it is time to look at all card fees and surcharges and regulate them because the market has failed,” he says.

Given that Tabuteau also wants an inquiry into the activities of the Australian-owned banks in New Zealand, the fact that he is hot on the credit card transaction fees is probably not surprising.

But what is surprising is that Treasury agrees with him.

And as recently as May it was actively working on proposals to regulate the card payments.

Papers published under the Official Information Act show that inFebruary Treasury wrote to Commerce Minister Paul Goldsmith expressing concerns about the level of credit card merchant payments to banks.

“The Treasury agrees with the Ministry of Business Innovation and Employment’s  judgement that the case for regulation in New Zealand needs to be investigated, given that market forces appear unlikely to drive more efficient outcomes absent government intervention,” the aide memoire says.


“Competition between the card schemes appears to be driving higher, not lower, fees.
“Furthermore, new payments providers (such as Apple Pay, Android Pay, and Semble) continue to rely on bank-issued scheme cards for their underlying payments processing.

“Interchange fees are directly regulated in some jurisdictions including the United States, the European Union, and Australia.

“At present, there is no such regulation in New Zealand.

“Current provisions under the Commerce Act would only be able to address potential issues around interchange fees should there be clear evidence of anticompetitive behaviour or an absence of current or potential competition (which does not appear to be the case).”

And in a paper headed “Retail Payments Systems – Preliminary  Treasury Thoughts” a Treasury official whose names ahs been redacted says” “In my opinion, there is clearly an issue with the efficiency of the retail payments sector.

“This issue arises largely from the ineffectiveness of competition in moderating

interchange fees.

“The issue is likely to deteriorate over time as the competitive tension provided by EFTPOS declines.

“This suggests a growing need to consider government intervention in the sector.

to entry and effective competition), given the limitations associated with surcharging.

This does not rule out introducing direct interchange fee regulation in the longer term,

should there be a clear net benefit to doing so.”

The official is cautious, however, and suggests that it did not appear desirable to regulate immediately and some time was needed to see how the market played out.

But even so, the Treasury report will be a shot in the arm for NZ First which has struggled to gain credibility with its persistent attacks on banks.

That’s partly because there often seem to be shades of the old Social Credit in some New Zealand first members’ thinking on the question of banks.

The party’s conference passed a remit which was vintage Social Credit calling for the framing industry to be given access to reserve bank credit.

But with both the Commerce Commission and now Treasury suggesting that the credit card commissions need regulating, Mr Tabuteau may find himself in the mainstream.