Surcharges on in-store payments to be banned

Monday, 28 July 2025

The Government is planning to scrap in-store surcharges for Visa and Mastercard payments from mid-2026, but Labour and Hospitality NZ have warned the cost could be shifted to small businesses and ultimately shoppers.

Commerce Minister Scott Simpson Surcharges on Monday announced a plan to ban some surcharges on in-store payments by May 2026 at the latest. Surcharges cover the fees businesses pay for accepting contactless payments, including PayWave.

Legislation to underpin the change would be introduced before the end of the year. Some charges will continue, such as for American Express and foreign-issued cards.

A Mastercard spokesperson said the ban would bring New Zealand in line with other countries.

“We welcome the New Zealand Government’s move to tackle surcharging by proposing a ban on all regulated domestic card transactions, aligning the country with other leading economies at a time when payment acceptance costs have never been lower.”

An end to ‘excessive’ surcharging

Consumer NZ welcomed the ban, which it said would “put an end to excessive, hidden and unavoidable surcharges” that costs an estimated $65 million a year. Its acting head of research and advocacy, Jessica Walker, said anything above 2% was excessive.

“We’ve received close to 300 complaints about excessive surcharges in the last few years,” she said. “In some cases, card payment surcharges were as high as 25%.”

The advocacy group has been calling for surcharge regulations since 2017, she added.

“Surcharges for debit and credit cards are banned in the United Kingdom and European Union, and the Reserve Bank of Australia recently proposed a surcharge ban – so this brings us nicely in line with other countries.”

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Explainer Editor Lloyd Burr has dug deep into the issue of contactless surcharges. Read part 1: Pesky contact surcharges: Comparing payment costs and part 2: Who’s making money out of pesky contactless surcharges.

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‘Someone else’s problem’

Labour’s Arena Williams said there should not be surcharges for customers at all, but pointed out the Government’s plan didn’t deal with banks and merchants “who still scoop a big fee”.

“Lifting and shifting the fee doesn’t take it away, it just makes it someone else’s problem or a cost to pass on,” she said.

Meanwhile, Hospitality NZ, membership-based industry association, said businesses may have to increase their prices.

“It’s important to recognise that electronic payments come with real costs to businesses,” chief executive Steve Armitage said.

“If surcharges are removed, many operators will have to adjust their pricing to reflect that – particularly for small hospitality operators already under pressure.

‘No more surprises’

Simpson pointed out some retailers don’t make clear what the surcharge was for their customers, which was a problem.

“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,” he said.

“By May 2026 at the latest, we will ban surcharges for in-store payments. Shoppers will no longer be penalised for their choice of payment method, whether that’s tapping, swiping or using their phone’s digital wallet.

“That pesky note or sticker on the payment machine will become a thing of the past.”

The Commerce Commission had also investigated the “interchange” fees involved with card payments.

The commission said some merchants intentionally stung shoppers with excessive surcharges.

As of December 2025, the interchange fees charged to shops will reduce as a result of the commission’s work.

Simpson said that only local credit and transactions companies, Visa and Mastercard, would be covered by this ban. He said their fees were already regulated and they were local companies, whereas Amex and others were based offshore.