For as long as I’ve been in payments, the conversation has almost always started in the same place: fees. How much they cost. Why they exist. Why they’re too high. Why they should be lower - or removed altogether.
What’s rarely discussed with the same energy is what those fees actually pay for, and what quietly disappears when we design payment strategies around avoiding them.
This is a story about that gap.
A Small Sports Club and a Very Expensive Lesson
One of our merchants is a small local sports club. Passionate volunteers. Tight budgets. Deep roots in their community.
They hosted an international tournament; teams from Australia and other countries travelled to compete. The stands were full, the atmosphere was buzzing, and the opportunity to fund the club’s future was right there.
But when the gates opened and the crowds arrived, a problem became obvious.
They only accepted traditional swipe CHQ/SAV EFTPOS.
- No Visa
- No MasterCard
- No payWave
- No Credit Cards
Australian participants couldn’t buy food or merchandise. International visitors couldn’t pay entry fees, grab a drink, or support the club - unless they happened to be carrying cash. Why? Because EFTPOS as we know it only works in New Zealand, it doesn’t exist as an issuing or acceptance method in any other country.
By the end of the event, the club estimated they had lost tens of thousands of dollars in potential revenue. All of it in an attempt to avoid merchant service fees.
The irony was hard to miss. The fees they were trying to avoid would have been a fraction of the revenue they never captured.
From the Consumer Side: When Things Go Wrong
Now let’s flip perspectives.
In recent years, we’ve seen a wave of business closures and liquidations. Consumers who paid for goods or services that were never delivered were suddenly left out of pocket.
Except not all consumers.
Those who paid using scheme debit or credit cards – Visa, Mastercard, American Express, UnionPay - often had a path to recovery. That’s because these transactions are protected by card network rules, including chargeback rights and fraud protections.
Both Mastercard and Visa for example offer strong cardholder protections through Zero Liability policies and dispute mechanisms. These aren’t optional extras; they are rules that card issuers (your bank) must follow.
The traditional swipe EFTPOS CHQ/SAV product simply doesn’t offer the same protection. When something goes wrong, consumers using EFTPOS often carry the loss themselves.
In those moments, the value of card acceptance becomes very real, very quickly.
A Familiar Conversation from the Interchange Fee Changes
When the Commerce Commission first legislated caps on interchange fees, just one component of the overall merchant service fee, I had countless conversations with business owners.
In one breath, they celebrated.
“Finally, lower costs for my business.”
In the next breath, frustration followed.
Their reward points were harder to earn.
Interest-free periods were shorter.
Free travel insurance disappeared.
Pre-sale access to major sporting events vanished.
These weren’t coincidences. They were consequences. You can’t remove funding from a system and expect all the benefits to remain untouched. We wanted cheaper acceptance - but we also wanted all the value that acceptance funded.
For Kiwis Who Love to Travel
Payments don’t stop at the border, once you clear customs and hit the boarding gate.
Try travelling overseas with only a traditional swipe EFTPOS card and the limitations become obvious very quickly. Cash becomes essential. Convenience disappears.
By contrast, a Visa or Mastercard debit (EFTPOS) or credit card works almost anywhere in the world. Fraud protections follow you. If your card is stolen and used incorrectly -and you’ve followed the rules - the schemes and banks step in to make it right.
That global interoperability doesn’t happen by accident. It exists because there’s an ecosystem behind it, funded by merchant service fees.
Cost Is Easy to See. Value Takes Perspective.
None of this is an argument against competition, transparency, or better pricing. Those things matter, and the industry should always be challenged to do better.But we also need to be honest about trade-offs.
Everything has a cost.
And when we focus only on removing cost, we often remove:
- Consumer protection
- Global access
- Convenience
- Trust
Then we wonder why the experience feels worse.
Merchant service fees aren’t perfect. But they underpin systems that allow people to pay safely, businesses to trade globally, and consumers to have confidence when they tap, click, or travel.
The real question isn’t whether payments should cost money.
It’s whether we’re prepared for what disappears when we pretend they shouldn’t.
