The New Zealand Government has formally begun a public review of the fees charged to retailers and consumers by credit card scheme providers and banks, publishing an issues paper that looks at whether to regulate the fees.Commerce and Consumer Affairs Minister Paul Goldsmith released the issues paper after eight months of ministerial discussion on whether the increasing use of Mastercard and Visa credit cards, particularly contactless cards, was unfairly increasing costs to consumers and retailers.Goldsmith warned in late September that a more formal public review was likely after heavy lobbying from the 5000-member Retailers NZ Association, which said New Zealanders were paying NZ$380 million a year in undisclosed fees for credit cards, and for contactless cards in particular. Retailers and others have also warned that the rise of contactless cards could undermine the use of New Zealand's EFTPOS system for payments through bank debit cards, which do not charge consumers and retailers."Concerns have been expressed around the cost of credit card payment fees in New Zealand, particularly in comparison to Australia, and in the context of a decline in the use of EFTPOS," said Goldsmith."The issues paper is designed to get a better understanding of how retail payments operate in New Zealand, with particular regard to innovation and efficiency," he said."It will inform policy work around whether regulation is needed to ensure a fair distribution of costs between banks, businesses and consumers."He pointed to a variety of policy responses, ranging from caps on charges in Australia to minimal regulation in Canada."In most markets, we expect competition between providers to keep costs down. The issues paper raises the question of whether or not that is happening in practice," Goldsmith said, adding however that he was cautious about regulating an industry in a way that might affect innovation."But the government is watching this area closely and is prepared to consider regulatory options if competition fails to moderate costs. As an initial step we will be seeking greater transparency around the fees paid by merchants," he said.Retail NZ said in a paper published in November that prompted the review that New Zealand retailers were paying 70c per transaction for a NZ$50 payment through a credit card transaction, while retailers in Britain and Australia were paying 50c and 42c respectively. Unlike in Australia, where credit card fees are regulated by the Reserve Bank of Australia, New Zealand's credit card fees for consumers and merchants are not regulated and disclosure is not standardised. There are no caps on interchange fees. Retail NZ cited research it commissioned forecasting these fees would rise to NZ$711 million per year by 2025.The Ministry for Business, Innovation and Employment wrote in the issues paper that merchants currently paid NZ$461 million a year in merchant service fees, and that the rise of contactless cards would see this rise by a further NZ$216 million per year.MBIE said it wanted to analyse whether consumers and merchants were bearing a fair share of the costs and whether card payment systems were being used efficiently."The