New Zealand to Ban Card Payment Surcharges, Merchants to Bear the Cost

In a move aimed at protecting consumers and simplifying the shopping experience, the New Zealand government is set to ban surcharges on in-store card payments. The change, expected to come into effect by May 2026, will place the cost of providing contactless payments on merchants rather than consumers. This decision is part of a broader effort to ensure transparency and fairness in retail transactions.

Surcharges to Disappear from Checkout Counters

The ban will apply to payments made in-store using Eftpos, Visa, and Mastercard. However, it will not cover online transactions or payments made with foreign-issued cards, prepaid gift or travel cards, or cards from networks like American Express or UnionPay. Commerce and Consumer Affairs Minister Scott Simpson described surcharges as a “hassle and an unwelcome surprise” for shoppers and emphasized that the policy aims to give consumers confidence in knowing exactly what they will pay at the point of sale.

The Financial Impact on Merchants

While the change will benefit consumers by eliminating surprise fees, it will increase the costs for retailers. Merchants will either have to absorb these costs or pass them on to customers through higher prices. However, the government has noted that the move will also lead to long-term savings for businesses, with an estimated $90 million in annual savings due to reductions in interchange fees paid to Visa and Mastercard.

Global Context and Enforcement

This policy aligns with similar measures in the United Kingdom and the European Union, where surcharges on debit and credit cards are already banned. Australia is also considering a complete ban on surcharges for Eftpos and Visa/Mastercard payments. In New Zealand, the Commerce Commission will be responsible for enforcing the new rules. If a business applies an illegal surcharge, consumers will be entitled to a refund, and legal action may be taken against non-compliant businesses.

What’s Next?

The government plans to introduce the Retail Payment System (Ban on Surcharges) Amendment Bill by the end of the year to make the policy legally enforceable. The bill will also require banks to provide clearer information to merchants about payment costs, helping them negotiate better deals with financial institutions.

This policy marks a significant step toward a more transparent and equitable payment system in New Zealand. By shifting the burden of surcharges from consumers to businesses, the government aims to foster a fairer retail environment while protecting shoppers from unexpected costs.