Commerce and Consumer Affairs Minister Kris Faafoi is ready to wave the stick of regulation if payments service providers hike the fees they charge retailers, and warned he will do so if those charges increase again.
Faafoi told the Payments NZ conference in Auckland he doesn't want to see more increases in interchange fees or merchant service feeds for credit and debit cards, which he says aren't "in the interests of consumers or the wider economy". He said he was encouraged by heavyweights Visa and MasterCard dropping the caps for some interchange fees that fell "unfairly" on small retailers and has so far chosen not to regulate, unlike his peers in Australia and Europe.
"However, that option remains very much on the table, particularly if I were to see fees increase again," he said in speech notes.
Faafoi has been stamping a strong consumer focus on his portfolio, seeking reviews into insurance contract terms and debt collection practices, and setting his sights on payday lenders' high interest rates.
Today, he also told the conference he wants an ongoing commitment from banks and schemes to increase transparency of costs with retail payments, and ensuring a cheap debit option remains available for merchants.
Faafoi is ambitious about the future of payments systems, and said in the next year he wants to see "more opportunities for consumers to quickly and securely make payments without the need for a debit or credit card" and a "real push for introducing new payment options in the in-store concept".
The minister immediately followed Reserve Bank deputy governor Geoff Bascand in the conference's line-up, who spoke about exploring a central bank digital currency.
"A central bank digital currency would be attractive to us if it could improve our currency distribution, payments efficiency and monetary or financial stability," Bascand said. "But these benefits are by no means guaranteed, and could come at some cost."
Among the pros of using crypto-currencies, such as Bitcoin, are cheaper and faster settlement with heightened transparency and no single point of failure. However, the cons would see a slower release of goods and services from a slow confirmation of the payment, high domestic fees from the associated energy use, and the inability to scale to large volumes of transactions because of the time taken to validate transactions.
"Judgement is required to weigh these findings, but it unlikely that a central bank digital currency would be issued if it posed large and significant risks to New Zealand’s financial system," he said. "Currently, it is too early to determine whether a digital currency should be issued."
Faafoi was more interested in open banking - which decentralises banking through third-party application programming interfaces (APIs) - in his presentation and will test whether the government should play a role in facilitating that sector.
He said his vision for open banking is that it makes it easier for people to build their financial capability and access goods advice, aggregate data for people, makes it easier for them to compare offers, and speeds up and adds value to payments.
"Speed is of the essence," he said. "I do not want to see New Zealand left behind in respect of the outcomes that open banking could deliver in terms of economic development and benefits for consumers."