Surcharges at the till gone by May - but will you pay more?

Tuesday, 29 July 2025

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Retailers and consumers have welcomed the Government’s decision to axe surcharges at the till by May next year, but some are concerned they will have to absorb the cost saying the banks and their fees are the real problem.

“Surcharges are a hassle and an unwelcome surprise when shoppers get to the till,” said Commerce and Consumer Affairs  Minister  Scott Simpson in announcing the changes on Monday.

Simpson said surcharges covered fees businesses paid for accepting contactless payments, but they were often more than the cost incurred and in some cases retailers did not make it clear what the percentage would be added to the purchase price.

The changes meant retailers could no longer add surcharges to debit and credit cards. but they would still be able to add surcharges to online sales, pre-paid and international credit cards.

Shoppers paid up to $150 million in surcharges a year, “including excessive surcharges of up to $65m”. That’s money that could be saved or spent elsewhere, Simpson said.

Similar charges were recently banned in Australia.

Callum O’Brien at hospitality group Five Fellas said he understood the intention behind banning Paywave surcharges and trying to create a fairer experience for consumers.

'However, in practice, the reality for small hospitality businesses like ours is more complex. The fees we charge reflect the actual costs we’re charged by payment providers and, in many cases, the surcharge doesn’t even fully cover what we pay. These fees can be significant, especially with the increased use of contactless payments,“ O’Brien said.

Removing the ability to pass on the costs would put even more pressure on already tight margins, at a time when the cost of doing business continued to rise. If the costs could not be passed on it would mean either the removal of contactless payment or higher prices, he said.

But Jessica Walker, acting head of research and advocacy at Consumer NZ, said scrapping surcharges would put millions back into the pockets of New Zealanders and make accepting payments much simpler for merchants.

“We’ve received close to 300 complaints about excessive surcharges (over 2%) in the last few years. In some cases, card payment surcharges were as high as 25%. We’ve even had complaints about surcharges being applied to eftpos transactions,” Walker said.

Shoppers were increasingly saying they would only use contactless payments when there was no surcharge.

In Christchurch, Coffee Lovers Cafe charges a 1.65% surcharge for paywave, despite getting charged 3% by the bank.

“And people still complain,” worker Olivia Ferris said. “Once a lady paid with surcharge and then asked for a refund so she could pay with cash.”

Ferris said “for sure” coffee prices and food prices might have to go up, to combat the cost once a ban was in place. “It’s going to be tough for all the small businesses out there.”

Dairy and Business Owners Group chairperson Ankit Bansal said the changes to payment surcharge rules unfairly targeted small retailers instead of addressing the real problem — the banks.

'Both consumers and small retailers are feeling the squeeze from high bank charges,' Bansal said.

The ban follows the Commerce Commission decision to reduce interchange fees paid by businesses to accept Visa and Mastercard payments, which would save businesses $90 million a year.

Retail NZ Chief Executive Carolyn Young said while removing surcharges from in-store purchases was good for domestic consumers, retailers continued to face costs to accept debit and credit card payments and those costs would probably be added to prices.

Small businesses said banks’ associated fees with providing contactless payment were too much to absorb, and had no choice but to pass them onto customers in the form of a surcharge, she said.

Retailers said the complexity of the merchant payment system prevented them from fully understanding the charges and fees they paid, Young said.

While larger chain businesses — such as supermarkets or retail giants — were easily able to manage the fee, smaller businesses were increasingly struggling with the added cost, leading them to pass it onto customers.

Newmarket Business Association chief executive Mark Knoff-Thomas said anything that improved the customer experience was a move in the right direction, but he wanted to know that there would not be unintended consequences.

The commission needed to continue investigating and understanding the root cause of the surcharges, he said, and to ensure they were fair and reasonable.

Otherwise there was a concern the costs would come back to the consumer.

James Bryant, the owner operator of Remuera's Knead on Benson, said his business decided not to pass the surcharge fee onto consumers, wanting a “frictionless experience” for diners buying premium food.

“We know customers are busy, especially during their morning coffee run, and no surcharge means they can tap and go,” he said.

“Another consideration for us was that our products are made with premium ingredients and so our price point reflects this. We felt that adding another charge on top may have been unsavoury for customers.'

But he hopes the changes will bring “uniformity” to hospitality and retail.

“It doesn't make sense to be zapped with up to a 2.5% surcharge at some places but not at others, especially if the transactions are on the same card,” he said.

'It's not an easy time for the hospitality industry in New Zealand but Knead on Benson is in its fourth year of operation and we consider card surcharges to be just another cost of doing business.“

The commission proposed in December that part of the fee be capped, with the commission finding this would save Kiwis behind the counter $260m a year, with the savings passed onto customers.

However, Mastercard has stated the blame for surcharging lay with the businesses, claiming merchants were overcharging customers through these fees.