'Misses the mark': Retail NZ calls on Government to pause surcharge ban, chief executive says 'those costs won't disappear, they'll just be hidden in higher prices for everyone'

The Government’s proposal to ban card payment surcharges is "poorly targeted, rushed and risks significant unintended consequences", the chief executive of the country's lobby group for retailers, Retail NZ, says.

In July, the Government announced it would be introducing the Retail Payment System (Ban on Surcharges) Amendment Bill at the end of this year. If given the green light, this Bill would see a surcharge ban in place by May 2026 or earlier.

At the time of the announcement, Commerce and Consumer Affairs Minister Scott Simpson said: “Shoppers will no longer be penalised for their choice of payment method, whether that’s tapping, swiping or using their phone’s digital wallet."

"A ban on surcharges means no more surprises for people who currently feel like they’re being charged to use their own hard-earned money. It means they can make a purchase knowing exactly what they’ll pay, and how they’ll pay it.”

But on Tuesday, Retail NZ chief executive Carolyn Young said the Bill misses the mark.

“If surcharges are prohibited, we will inevitably see prices rise in-store. This will cost consumers."

The organisation is calling on the Government to pause the Bill and allow for "thorough" consultation.

Retail NZ also wants the Government to support the Commerce Commission's planned 2026 review and consultation of surcharging, include online transactions in any future surcharge regulation and encourage investment in technology that enables "accurate" and "fair" surcharging.

It also wants the Government to "focus on transparency and communication - not blanket bans".

Young said retailers were not profiteering and surcharges were a transparent way to recover the high costs of accepting certain payment methods.

"If this Bill passes, those costs won't disappear  — they’ll just be hidden in higher prices for everyone.”

The lobby group, which said it represents nearly 70% of New Zealand's domestic retail turnover, has done a survey on its members about the proposed surcharge ban.

Retail NZ said 65% opposed the surcharge ban while 26% of retailers were in support.

Alongside this, the survey found:

• 70% support the current system where customers can choose a payment method that avoids a surcharge, and businesses can choose to apply a surcharge
• 44% of respondents currently apply a surcharge
• 45% of retailers said they will raise prices across the board if the ban is implemented
• 28% may stop accepting certain payment methods that incur higher fees

Retailers are already under pressure, Young said, and this Bill will make things harder.

“This Bill will entrench the dominance of the major credit card companies, and make it harder for new payment technologies via fintechs to gain traction. It’s a step backwards for competition and transparency.”

Mastercard and Visa are two of the largest global payment operators in the world.

In 2024, the Commerce Commission - which regulates Visa and Mastercard credit and debit networks - reported that $95 billion of card payments are processed annually by the two in New Zealand.

“We urge the Government to take a more pragmatic, evidence-based approach," Young said.

Open letter

This isn't the first time Retail NZ has been vocal about the surcharge ban.

In September, Retail NZ along with more than 30 other business groups signed an open letter to Simpson.

In the open letter, they wrote: "Credit card transactions carry significantly higher processing costs than EFTPOs or debit card payments. Surcharges reflect this reality - not as a means of profiteering, but as a transparent mechanism for cost recovery."

"Eliminating surcharges does not eliminate these costs; it merely obscures them."

But the proposed ban also has its supporters.

When the announcement was first made, consumer advocacy organisation Consumer NZ said "the ban is a no-brainer,” and business lobby group BusinessNZ said the Government’s decision was a step in the right direction for consumers and for businesses that issue the cards.

“This is the way the rest of the world is regulating," BusinessNZ director of advocacy Catherine Beard said.

The Government has been steadfast in its approach to this Bill.

Simpson told media outlets that by the time the surcharge ban was in place, businesses would be saving money from banking fee reductions.

These reductions refer to the Commerce Commission's July decision on interchange fees - issuers of Mastercard and Visa cards - usually banks - receive an interchange fee every time someone uses their card to pay for something.

Interchange fees make up about 60% of merchant service fees, according to the Commerce Commission, and alongside this, it costs New Zealand businesses around $1 billion a year to accept Visa and Mastercard payments - these costs are often passed to consumers through surcharges and higher product costs.

The Commission said in July that it determined these costs were too high and had acted to reduce this costs by $90 million a year.

In response to the letter, Simpson referred to this $90 million figure and said this would be on top of the $140 million annual savings from 2022 fee caps.

Simpson also said: “Overseas precedent shows that a ban on payment surcharges works, and there is no reason for New Zealand to be an anomaly."

The United Kingdom and the European Union have a surcharge ban, and the Reserve Bank of Australia reached a preliminary view that it would be in the public interest to remove surcharges on EFTPOS, Mastercard and Visa cards.

Prime Minister Christopher Luxon has also chimed in, telling media the move was around transparency.

"We've got a value set in New Zealand which is we have very transparent pricing."

"We don't want to see a growth in surcharges and other add-ons, we want to be able to say the price you see is the price you are going to pay," Luxon said.