Surcharge Ban Will Hurt Small Businesses And Push Up Prices

Retail NZ is urging the Government to pause its proposed ban on merchant surcharges, warning that the move will increase costs for consumers and disproportionately harm small businesses.

Retail NZ Chief Executive Carolyn Young says the Retail Payment System (Ban on Merchant Surcharges) Amendment Bill is poorly targeted, rushed and risks significant unintended consequences.

“This Bill misses the mark. It targets retailers — who are simply passing on the costs imposed on them — rather than addressing the root cause: the payment scheme providers,” Ms Young says.

“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% of New Zealand’s domestic retail turnover and surveyed its members to understand their views of the proposed surcharge ban. The results show strong opposition to prohibiting surcharges:

• only 26% of retailers support the surcharge ban, with the majority (65%) opposed to it
• 70% support the current system where customers can choose a payment method that avoids a surcharge, and businesses can choose to apply a surcharge
• 44% of respondents currently apply a surcharge. This is up from the 26.5% a Retail NZ survey recorded in 2024, reflecting rising costs and tighter margins for retailers
• 45% of retailers say they will raise prices across the board if the ban is implemented, while 28% may stop accepting certain payment methods that incur higher fees.

“Retailers are not profiteering. 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,” Ms Young says.

Retail NZ warns that the ban will 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,” Ms Young says.

Retail NZ’s submission to the Ban on Merchant Surcharges Amendment Bill also highlights the uneven playing field created by exempting online retailers from the ban, disadvantaging bricks-and-mortar businesses.

Retail NZ is calling on the Government to:

• pause the Bill and allow for thorough consultation
• support the Commerce Commission’s planned 2026 review and consultation of surcharging
• include online transactions in any future surcharge regulation
• encourage investment in technology that enables accurate, fair surcharging
• focus on transparency and consumer education, not blanket bans.

“Retailers are already under immense pressure. This Bill will only make things harder. We urge the Government to take a more pragmatic, evidence-based approach,” Ms Young says.

To read Retail NZ’s submission on the Retail Payment System (Ban on Merchant Surcharges) Amendment Bill, go to: https://retail.kiwi/wp-content/uploads/2025/10/20251010-Retail-NZ-submission-Retail-Payment-System-Ban-on-Merchant-Surcharges-Amendment-Bill.pdf

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