Originally Posted by
sbiddle
Banks are allowed to charge customers for EFTPOS transactions and did so still commonly up until around ~15 years ago. Remember ATM fees only disappeared here within the past 10 years. Many customers never paid EFTPOS or ATM fees but many people did pay transaction fees for both or had a number of electronic transactions for free each month and then paid if you went beyond that.
As a merchant however you don't pay EFTPOS fees and banks are not allowed to charge for these - a merchant simply pay the monthly fee for network access and a terminal fee, both of which mean EFTPOS still has an indirect cost even if there is no per transaction cost.
Despite all the shortcomings of the Commerce Commission they have been smart enough to realise that getting rid of interchange completely is bad as it does not encourage new entrants to the market any any innovation in the payment space. You can argue the reason there has never been any innovation around EFTPOS is largely because there is actually no revenue to fund innovation.
Yes you are right the banks can charge payers - but to go back to that model will be highly unpalatable, even to themselves. This will drive up cash usage and therefore cost of cash handling for the banks. These are hidden operational costs that the banks have conveniently forgotten thanks to the high penetration of card networks in NZ.
I still think EFTPOS is a missed opportunity here in NZ. I get EFTPOS staying largely the same since 30 years ago can be attributed to a consistent lack of investment. But "EFTPOS" isn't really an entity here as it is in AU, rather just a loose collection of networks doing roughly the same thing. These network operators do get a rebate from the banks per transaction, plus as you pointed out terminal rental and monthly access fees from merchants. So they have the means to invest in innovation if they wanted to. Granted one of these networks was once owned by the banks and the banks may have tied their hands up, but that was a good six, seven years ago also.
And there is finally some innovation in the market with the advent of open banking. I wonder if Air NZ will start cosying up to some of these new open banking operators from a loyalty perspective?