a day ago
Surcharge Ban Will Benefit Consumers, Retail NZ Says
Banning surcharges will improve the retail experience for customers but risks prices being increased to cover the costs of accepting credit card payments, Retail NZ says.
'Retail payments are a contentious and complex area for retail businesses. We are pleased the Government has listened to our calls for changes in the system, to enable retailers to provide better customer experiences,' Retail NZ Chief Executive Carolyn Young says.
The changes will mean retailers cannot add surcharges to in-person domestic debit and credit cards. However, businesses will still be able to add surcharges to online sales, pre-paid and international credit cards. The changes are expected to come into force by May 2026 at the latest.
Removing surcharges from in-store purchases is a positive move for domestic consumers, but the wider issue of pricing will need to be considered, Ms Young says.
'Retailers continue to face costs to accept debit and credit card payments and these costs will likely be added to product prices in future,' she says.
The surcharge ban will likely see an accelerated decline in EFTPOS payments by consumers. EFTPOS payments do not incur any fees to retailers. As consumers change from using EFTPOS to contactless debit and credit cards, there will be a corresponding increase in the fees paid by retailers, so the benefits in the reduction of the interchange fee will be short-lived, especially for SMEs.
A 2024 survey of Retail NZ members found that only 25.6% of respondents applied surcharges. Almost half of retailers calculated a rate that covered their costs, while 39% took advice from their terminal provider or relied on information from their bank statement. About 5% looked at what other retailers are charging.
Members told us that the complexity of the Merchant Payment System prevented them from fully understanding the charges and fees they pay. These fees include interchange fees, scheme fees, switch fees, other external costs, internal costs and an acquirer margin.
Considerable work will be needed to ensure that terminals have the ability to distinguish between domestic debit and credit cards, and commercial or international credit cards, and charge differential surcharge rates, Ms Young says. Retail NZ's position is that all cards should be treated equally.
Retail NZ also wants certainty around the Commerce Commission's ability to monitor and enforce both the new interchange fees and the ban on surcharging. The Commerce Commission will need to ensure that the fees being charged to merchants reflect the new legislation, that the savings are passed on to retailers and that other fees are not increased.
'We will be seeking more detail on the surcharge changes, particularly around commercial credit cards which are not mentioned in today's announcement, and possible future changes to online transactions. We look forward to continuing to engage with the Government as it progresses these changes,' Ms Young says.
