KiwiBank is cutting dishonour fees in a move that will reduce its revenue by about $18 million per year.
The bank says it will reduce such fees for failed automatic payments, direct debits and cheques for personal and business accounts
from the beginning of October.
Unarranged overdraft fees will also be reduced, and honour fees will be removed.
Banks in New Zealand have been following the lead of the National Australia Bank and Westpac Australia, which recently announced they would discount overdrawn fees to appease customers.