Peak body Retail NZ is warning the Government that its proposed ban on merchant surcharges will increase costs of consumers and disproportionately harm small businesses.
The New Zealand Government is currently pushing through its Retail Payment System (Ban on Merchant Surcharges) Amendment Bill, set to prohibit surcharges on all in-store EFTPOS, Visa and Mastercard payments.
Retail NZ CEO Carolyn Young said the Bill is poorly targeted, rushed and risks significant unintended consequences.
“This Bill misses the mark,” Young said. “It targets retailers — who are simply passing on the costs imposed on them — rather than addressing the root cause: the payment scheme providers.
“If surcharges are prohibited, we will inevitably see prices rise in-store. This will cost consumers and increase their concerns about the rising cost of living.”
Retail NZ represents nearly 70 per cent of New Zealand’s domestic retail turnover and surveyed its members to understand their views of the proposed surcharge ban.
Only 26 per cent of retailers support the surcharge ban, with the majority (65 per cent) opposed to it
Seven in 10 (70 per cent) support the current system where customers can choose a payment method that avoids a surcharge, and businesses can choose to apply a surcharge.
Just under half (44 per cent) of respondents currently apply a surcharge. This is up from 26.5 per cent which was recorded in a Retail NZ survey done in 2024.
Meanwhile, 45 per cent of retailers say they will raise prices across the board if the ban is implemented, while 28 per cent may stop accepting certain payment methods that incur higher fees.
“Retailers are not profiteering,” Young said. “Surcharges are 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 Commerce Commission estimates New Zealanders pay about $150 million in surcharges annually. The Commission also reported that approximately 20 per cent of New Zealand businesses surcharge, with most businesses choosing to absorb payment costs as a usual cost of doing business.
At the other end, businesses pay $1 billion in merchant service fees each year, mainly to banks, for accepting Visa and Mastercard debit and credit payments (including online transactions).
In a media statement last month after the Bill passed its first reading, Commerce and Consumer Affairs Minister Scott Simpson said the Bill is set to be in place by May 2026, “or sooner if possible.”
“By the time the ban is in full swing, the savings from the Commerce Commission’s latest cut to banking fees will benefit businesses, with expected savings of up to $90 million a year. That’s on top of the earlier savings of $140m from caps set in 2022,” Simpson said.
“The ban means Kiwi shoppers will no longer be confronted at payment terminals by a pesky sticker and surprise, sometimes excessive, costs.”
Retail NZ came back swinging, pointing out that the ban could have a regressive impact, forcing low-income consumers who use cash or EFTPOS to subsidise the rewards and convenience enjoyed by credit card users.
“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,” Young said.
The retail peak body has since made a submission on the Bill, which also highlighted the “uneven playing field” created by exempting online retailers from the ban, which the organisation claims will disadvantage bricks-and-mortar businesses.
Retail NZ is calling on the Government to pause the Bill and allow thorough consultation, include online transactions in any future surcharge regulation, and support the Commission’s planned 2026 review and consultation of surcharging.
The body also wants to see investment in technology to enable accurate and fair surcharging, as well as a focus on transparency and consumer education, rather than blanket bans.
“Retailers are already under immense pressure,” Young said. “This Bill will only make things harder. We urge the Government to take a more pragmatic, evidence-based approach.”