New Zealand’s 0% Interchange Cap
Although the 0.80% credit cap in New Zealand is in line with a similar cap in Australia, debit interchange in New Zealand is tiered depending on the consumer’s card being contactless or online – unlike Australia’s, which is the same for all debit interchange rates. Currently, inserted and swiped debit is the predominant way of making in-store payments, but recent trends suggest this may be changing. In 2020, the New Zealand government released Covid-19 mandates requiring all consumers to make only contactless or online transactions⁸, in effect forcing many merchants to adopt contactless terminals and open online channels to continue to do business. As seen in Figure 2, by the end of the year, around 52% of terminals were contactless-enabled, and domestic online spend increased by 44% (in total, around NZD 4 billion in ecommerce spend). ⁹ New Zealand’s 0% interchange cap for contact debit provides many local merchants with substantial savings and a cost-effective way of payment acceptance. If the volume in New Zealand continues to shift to other interchange tiers, merchants may still be in danger of paying for more costly debit interchange than Australian merchants in the long term.