Rahul Sethi says Paymark Eftpos fee rises will hurt his business. Photo / Stephanie Worsop
Rahul Sethi says Paymark Eftpos fee rises will hurt his business. Photo / Stephanie Worsop
Paymark's 28 per cent hike in Eftpos fees could prove "crippling" for local businesses already struggling post-Covid, with one association president saying the decision "is bad timing and will not help anyone".
Paymark, which processes 75 per cent of the country's electronic card transactions, has increased the fee to usean Eftpos terminal from about $14 to $18 per month.
But the Kiwi-founded, French-owned payments company has defended the move, saying it has not increased its fees for retailers since 2017.
Back then it increased its fee by 50 cents, compared to $4 this time around. The increase works out to be a 28 per cent hike.
"We have not put the fee up for several years and held off raising the fee during the worst of the Covid outbreak.
"However, with continuing compliance and security obligations an ever-present battle, we have no choice but to increase the monthly fee if we're to offer our retailers the fastest, most secure mechanism for transferring funds," the company said.
Paymark would invest the additional funds into "continually upgrading technology and security to ensure New Zealand's payments network remains a safe, secure and reliable method of processing transactions", it said.
Restaurant Association of New Zealand Rotorua branch president Sharon Wallace said the fee increase came at a time when "people are just trying to make ends meet".
"It's going to be crippling for some, there will be more cost-cutting, people won't hire more staff. This, in combination with all the other rising overhead costs, could hugely impact businesses in the region."
Wallace said businesses needed all the help they could get at the moment.
"It's very poor timing. Increasing the fees now is not going to help anyone. By all means, review it in six months but we need to be helping businesses, not weighing them down with more costs."
Wallace said things were looking up for businesses after the first wave of Covid-19 but "more businesses have been hit" following the second wave.
Tauranga Chamber of Commerce chief executive Matt Cowley. Photo / File
Tauranga Chamber of Commerce chief executive Matt Cowley said his biggest concern was Paymark's "massive" market share.
"Paymark is a dominant force and many businesses are critically reliant on them so they will want to be careful about abusing that power.
"It is a very vulnerable time for businesses and merchants. Some bigger companies will be able to absorb the cost but for some smaller businesses or those just starting out, it could be tough.
"It's not just Eftpos fees rising, we're seeing a cumulative impact of increasing fees such as council rates and the minimum wage.
"So businesses are not only fighting against the effects of Covid but they are also trying to manage overhead costs that keep rising."
Despite this, Cowley said the business community anticipated "red hot summer spending" and were excited about the pick-up expected over the Christmas period.
Rotorua Chamber of Commerce chief executive Bryce Heard said the rise was "a cost we could do without".
Though he hadn't spoken to local businesses about the fee, he anticipated there would be some that were unhappy with the decision.
"Businesses are already under huge pressure because of Covid."
Greg Harford, chief executive of Retail NZ. Photo / Supplied
Retail NZ chief executive Greg Harford said the fee hike was poor timing.
"While not necessarily large in dollar figures, the rise comes at a time when a quarter of retailers are not sure they're going to survive the next 12 months.
"While it's unlikely this increase alone will tip a business over, sales are down for many and it could prove to be an added pressure."
Hammon Diamond Jeweller owner Julie Hammon said it would have been better had the increases been small and frequent, rather than one big increase.
Julie Hammon and Alexandra Hammon-Elliott from Hammon Diamond Jeweller. Photo / File
"Paymark has probably held off on increases over the past few years but it is a little more painful when you get one big increase.
"Relatively speaking, it's not huge in dollar amount, but it is a large percentage. We have just the one Eftpos machine so it's not going to affect us too much but it's another thing on top of a lot of other issues we're struggling with right now."
Rahul Sethi says Paymark Eftpos fee rises will hurt his business. Photo / Stephanie Worsop
Rotorua's Verdict Clothing owner Rahul Sethi said the increase was a "slap in the face" for struggling retailers.
"It feels like a betrayal. We get an Eftpos machine and then they hike up the price. If I did that to my customers they would just leave but we can't leave because Paymark has dominant market share.
"On the face of it you think, 'oh, it's just a couple of dollars' but when you're already struggling, Covid has taken away the retail customers and your other expenses are increasing too, it becomes really hard. It's a real concern."
Sethi said his wholesale sales were keeping his store ticking over but the Eftpos fee increase would have an impact on the business.
"Every dollar has an impact at the moment. We need all the help we can get, not bigger bills to pay."
Paymark is the country's largest electronic payments network and was previously owned by the four big banks - ANZ, ASB, BNZ and Westpac. It was acquired by Paris-based Ingenico Group for $190 million in 2018.
