28% hike in Paymark's eftpos charge puzzles Retail NZ, Eftpos NZ says it won't follow suit

Wednesday, 7 October 2020

Less than two years after Paymark was sold by the big four banks, its fees have been dramatically increased by its new French owner.

Most of the country’s shops are now having to pay an extra $4 a month for every eftpos terminal they use after the country’s largest eftpos network operator, Paymark, hiked its fees by 28 per cent.

However, Paymark competitor Eftpos New Zealand said it would not be following suit.

Paymark’s fee rise on September 1 came less than two years after banks ANZ, ASB, BNZ and Westpac sold Paymark to French company Ingenico Group for $190 million.

The company is believed to have about 70 per cent of the eftpos market, with the remainder held by Eftpos NZ, which is owned by Californian company Verifone.

Paymark said in a statement that the fee increase to $18 a month per terminal was its first price rise since a 50 cent increase in 2017.

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The terminal fee is understood to be the main source of income for Paymark, which reported a profit of $11m in the nine months to December, down from a profit of $21m in the preceding 12-month period.

Paymark said it had no choice but to increase its fee “if we’re to offer our retailers the fastest, most secure mechanism for transferring funds”.

The company said it would invest the additional income “in continually upgrading technology and security”.

Eftpos charges work differently from the processing fees retailers are charged by credit card companies, which are based on the volume and value of transactions.

Retail NZ chief executive Greg Harford said Paymark’s big price increase came as a bit of surprise to most people in the sector when it was first flagged in July.

“We don’t understand exactly what has changed now that requires a 28 per cent increase in fees, particularly from a business that I think is doing quite well anyway.”

The change had come at a time when the retail sector was under massive pressure due to Covid “and while $4 a month doesn’t sound like much it does all add up”, he said.

Eftpos NZ general manager Peter Hanson said it had no plans to review its own terminal fee of $13.50 per month.

“Our perspective is these are incredibly difficult times for the vast majority of New Zealand retailers.

“Particularly through the early days of Covid we gave a large number of our merchants a very substantial fee-waiver,” he said.

That had cost the company $4m to $5m, he said.

“It is just not appropriate to be increasing prices to merchants at this point, from our perspective.

“Obviously I can’t comment on the rationale behind Paymark’s price increase; their business is their business,” he said.

Paymark owner Ingenico is currently in the process of being taken over by another French firm, Worldline.