Retailers are backing an ACT proposal to allow surcharges for credit card payments when customers have a free option available to them.
ACT commerce and consumer affairs spokesperson Parmjeet Parmar has written to the chair of the Finance and Expenditure Committee and the Commerce Minister proposing an amendment to the Retail Payment System Amendment Bill.
The Government announced in July a ban on surcharges on card payments in-store, such as PayWave, from no later than May 2026.
Commerce and Consumer Affairs Minister Scott Simpson told RNZ’s Morning Report this week he’s hoping to press on with the charges at pace, and is looking forward to a possible “surcharge-free summer”.
“The issue of payment surcharges is more complex than it looks. Small price differences at the checkout reflect real costs imposed on merchants by payment providers.
“We need to make sure that in trying to protect consumers, we don’t end up unintentionally making them worse off or unfairly punishing businesses,” Parmar said.
“The principle behind the Government’s proposed ban on merchant surcharges can be justified. Consumers expect that the price they see advertised on the shelf is the price they will pay at the checkout.
“Where a business offers no free alternative to contactless payments such as inserting or swiping a card, or paying by cash, then there is no way for New Zealanders to avoid paying more than the advertised price – so in the interests of transparency, banning the fees can be justified.
“But in situations where an alternative option is available, a business that wishes to do so should be able to recoup the costs of providing a more convenient form of payment.
“If retailers are forced to absorb every payment fee without being able to offer alternatives, some may stop offering contactless or credit card options altogether – or simply raise prices for everyone.
“The effect of this is that higher costs are forced on those who previously chose not to pay for a contactless option, or struggling businesses are pushed to cut their narrow margins even further.”
Parmar said when there was no free alternative, banning the surcharge made sense for transparency.
“But where there is a choice, it’s wrong to punish businesses for offering convenience.
“Removing all flexibility would mean higher prices for everyone, less payment innovation, and even tighter margins for small retailers. Regulation should promote choice and transparency – not crush them.”
Retail NZ said it supported the proposal.
“Retailers continue to face strong headwinds as low consumer confidence continues with households continuing to feel the pinch of rising prices for essential goods… Dr Parmar’s proposed solution provides flexibility and enables businesses to continue to decide what is best for them and gives consumers choice,” Retail NZ chief executive Carolyn Young said.
“We are attending select committee next week and will be sure to let the committee know that retailers would support this amendment.
“We have urged the Government to pause the proposed ban, but minister Simpson was clear to us this week that he is not considering any pause or consultation.
“This amendment would enable the Commerce Commission to undertake a full consultation and address any key areas of concern.”
She said members had told her that they were very concerned about the looming ban.
Earlier advice released to RNZ under the Official Information Act shows that Ministry of Business, Innovation and Employment (MBIE) officials warned that there could be problems with the ban.
They also recommended the ban be limited to only in-person debit card payments, not credit cards.
MBIE officials said they were not aware of any other jurisdiction that had banned surcharges across all payment methods.
The Commerce Commission has estimated that 30% of merchants apply a surcharge, for a combined $150 million a year.
rnz.co.nz
