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Labour leader Jacinda Ardern will today unveil a policy aimed at reducing how much money small businesses are forced to pay for contactless payment services.

The Herald understands that part of Labour's plan is aimed at reducing the hundreds of millions of dollars paid in such fees every year.

The policy launch today follows a frenetic day for political parties as the election campaign began yesterday.

National revealed plans to combat methamphetamine and NZ First leader Winston Peters touted for votes at the University of Otago.

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Ardern is in Tauranga today to unveil the party's small business policy. It is understood it will include regulating merchant servicing fees, a move expected to be welcomed by the retail sector which has long been calling for change.

Businesses are charged fees for the use of contactless debit and credit card transactions, including mobile wallets and payWave, but there is no such fee for using an eftpos card by inserting or swiping.

The contactless payment fees have been an area of contention in New Zealand, which has much higher payment fees than Australia or the UK, and costs businesses here hundreds of millions of dollars annually.

Chief executive of Retail NZ Greg Hartford said because retailers tend to incorporate their bank charges into their overall pricing, there is effectively an "inequitable wealth transfer from less well-off Kiwis to better-off New Zealanders".

Bluntly, he said: "High fee levels are costing the whole economy".

Today's announcement would be welcome news to many small business across the country which had been struggling in the wake of Covid-19, Harford said.

Several months ago, at the height of the Covid-19 pandemic in New Zealand, debit card
payWave fees were slashed to zero to encourage contactless payment.

But the fees were reintroduced in July and business began to call for them to be reduced.

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Businesses doing it tough

Auckland bar owner Mike Howie, from Freida Margolis in Grey Lynn, told RNZ in August those fees were costing him thousands of dollars during what was already a difficult time.

He said many businesses were doing it tough in the CBD and needed a break or they might go under.

"It's just too tough for some of these businesses. We're lucky at the moment, but if this goes on any longer, again we have to start the same old, 'where can we get a break?'

"For example, are the banks going to do anything for us this time? At the moment, they said they were giving us free payWave [during lockdown] — my bank fees have quadrupled when they turned my payWave on, it was only on debit cards.

"I'm now in the thousands from the bank fees, rather than the hundreds."

Freida Margolis bar owner Mike Howie, left, and bar manager Kalin Lewis. Photo / Dean Purcell
Freida Margolis bar owner Mike Howie, left, and bar manager Kalin Lewis. Photo / Dean Purcell

According to numbers from economic consultancy Covec, the fees will likely cost businesses $556 million by the end of the year. Without intervention, that would rise to $711m by 2025, Covec's numbers show.

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Retail New Zealand has been questioning why the fees are so high and is calling for regulation to see them reduced.

In its 2019 Payments Survey, it pointed out the fees are unregulated in New Zealand, which means they are higher than in other countries.

For example, contactless payment fees in New Zealand are 1.1 per cent per transaction for a debit card.

But that figure is 0.6 per cent in Australia and 0.3 per cent in the UK.

The gap is also wide when it comes to contactless credit card payments — in New Zealand, it's a 1.5 per cent fee compared to 0.8 per cent and 0.6 per cent in Australia and the UK respectively.

Ardern is in Tauranga on the campaign trail today, starting her public appearances at a Papakainga development site just before 10am.

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She will then make a small business visit later in the morning, before making her small business announcement at midday.