ACT says payment surcharge ban needs fix; minister says it’s too late

Friday, 17 October 2025

It’s too late for the ACT Party to derail a bill that would ban shops and venues from charging customers a surcharge to pay for items using services such as Paywave, Commerce and Consumer Affairs Minister Scott Simpson has suggested.

The Government announced in July that it intended to stop businesses imposing payment surcharges on contactless payments made in person using Paywave and most credit cards by May at the latest.

But ACT’s commerce and consumer affairs spokesperson Parmjeet Parmar revealed on Friday that she had written to Parliament’s Finance and Expenditure Committee, and Simpson, proposing a major change to the Retail Payment System (Ban on Merchant Surcharges) Amendment Bill.

Parmar has proposed the surcharge ban should only apply to businesses that don’t offer a free alternative to contactless card payments, such as inserting or swiping a card or paying by cash.

As businesses usually accept Eftpos or cash, the move would limit the surcharge ban to a very small subset of outlets.

The issue of payment surcharges was more complex than it looked, Parmar said.

“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.”

Other possible outcomes might be “less payment innovation and even tighter margins for small retailers,” she said.

Parmar would not initially confirm whether or not ACT would oppose the surcharge ban without the change it was seeking, indicating that would be a matter for ACT’s caucus.

She didn’t want to pre-empt the processes of the Finance and Expenditure select committee which is considering the law change, she said.

“We are not saying that we won't support the legislation. That would be jumping to a conclusion at this stage.

“At this stage, we are just providing an idea that I have come up with, and let the select committee scrutinise it and see what they have to say,” she initially told The Post.

She later clarified that the bill was government policy and that ACT had committed to support the Government position.

“But the Government has options here. We have a select committee process to listen, to scrutinise legislation, and to consider options,” she said.

Simpson indicated he was unmoved by ACT’s doubts.

“It’s not unusual for parties to express different views in the select committee process.

“However, the proposal would, in my opinion, worsen and over-complicate the current issues we face in our retail payment systems. It is my belief that the price on the shelf should be the price at the checkout,” he told The Post.

“We know that surcharging is an annoyance for customers and an inconvenience at the point of sale, and that’s why we are moving to ban them entirely.”

The Government has previously estimated the cost of surcharges to consumers at $150 million a year, of which it estimates only $85m reflected retailers’ actual costs.

“Ultimately, Cabinet has already agreed to the bill and we intend to progress it,” Simpson said.

Labour commerce spokesperson Arena Williams said it had supported the bill progressing to the select committee as the policy behind the surcharge ban was good, but described the bill itself as “a dog”.

“I’ve already asked for advice on an amendment. If ACT will work with me to share the costs more fairly then we’ll end up with a better law with cross-partisan support that will stick,” she said.

ACT’s intervention follows a vigorous public campaign by retailers and some business organisations seeking a u-turn on the surcharge ban.

Retail NZ was quick to applaud Parmar’s proposed amendment.

Enabling retailers that offer a fee-free alternative, to be able to surcharge customers, made sense as it would “give everyone choice”, chief executive Carolyn Young said.

“As it stands, the bill will entrench the dominance of major credit card companies and make it harder for new payment technologies to enter the market.”

Retail NZ’s members had told it they were very concerned about the surcharge ban and the extra cost of doing business and many were considering increasing prices to cover the ban, she said.