Pressure is mounting on the banks to drop the fees they charge merchants for contactless payments in a bid to encourage more to sign up for the service which would mean fewer people having to touch keypads.

Greg Harford, chief executive of Retail New Zealand, this morning joined Mark Rushworth, Lance Wiggs, Dean Hall and other entrepreneurs calling for the fees to be removed during the pandemic.

Harford told Newstalk ZB this morning the World Health Organisation had backed contactless as a good idea to avoid people getting sick amid the coronavirus outbreak.

"Contactless technology means you are not exposing yourself to as many germs."

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But he said many retailers still don't offer the service because of concerns over cost.

"There is a perception of cost. Sometimes that is more perception than reality. But we are certainly encouraging retailers to look closely at their costs."

Harford said on average merchants paid around 1.1 per cent to 1.2 per cent of each transaction for contactless payments.

'Which doesn't sound like a lot but when you operate in an environment where the average net margin is only 3.6 per cent it adds up."

Harford said it was the banks which set the merchant fees.

"Ultimately it is down to them and how much money they are seeking to recover from customers."

Retail New Zealand had also been calling for more transparency on the fees for some time.

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Commerce Minister Kris Faafoi has been putting pressure on the industry to bring interchange fees - the fees banks pay each other - down and has warned he will regulate if they don't come down.

Harford said Visa and Mastercard introduced some changes to fees last year and it was waiting to see if this flowed through to retailers.

"We just don't know at this stage. We haven't quite seen that come through yet."

Retail New Zealand has joined calls by entrepreneurs who want the fees on contactless payments to be dropped during the virus outbreak. Photo / Supplied
Retail New Zealand has joined calls by entrepreneurs who want the fees on contactless payments to be dropped during the virus outbreak. Photo / Supplied

There have also been suggestions that the transaction limit be raised from $80 to $200.

Harford said almost all transactions were under the $80 limit.

"Most transactions would be captured by that threshold. There is certainly always room for upping that a little bit."

But he said that was ultimately up to the banks and how much security risk they were prepared to take on in case of fraudulent activity.

The Herald has requested comment from the banks.