Business Groups Propose Alternative Solution To Surcharge Ban

Retail NZ, the Auckland Business Chamber and Chambers of Commerce across the country are urging the Government to reconsider its proposed blanket ban on merchant surcharges and instead adopt a fair, workable solution that protects consumers while safeguarding business viability.

The organisations say a ban would unfairly shift costs onto all customers, including those using low-cost payment methods like EFTPOS, and would hit small and medium businesses particularly hard. With 97 percent of New Zealand businesses being SMEs and most operating on thin margins, the impacts would be significant.

They are proposing:

• Cap the surcharge on debit cards at 0.5 percent
• Cap the surcharge on personal domestic credit cards at 1 percent

Retail NZ Chief Executive Carolyn Young says a blanket ban is a blunt tool that will damage both consumers and businesses.

“Removing the ability to recover legitimate payment processing costs will force retailers to increase prices across the board,” Young says. “That is bad for consumers, bad for businesses and bad for innovation. Sensible caps rein in excessive surcharging while allowing retailers to recover genuine costs. We need smart regulation, not knee-jerk bans.”

Auckland Business Chamber CEO Simon Bridges says capped surcharges remain a balanced and practical alternative.

“Our members are strongly opposed to a ban because it pushes costs onto all customers in non-transparent ways,” Bridges says. “Reasonable caps protect consumers, provide certainty and avoid the unintended mess a blanket prohibition would create.”

Waikato Chamber of Commerce Chief Executive Don Good says removing surcharges entirely would put additional pressure on already stressed SMEs.

“Small and medium businesses cannot absorb yet another layer of cost,” Good says. “Caps acknowledge the real transaction costs these businesses face while preventing excessive fees. It is the right balance.”

Sharon Fifield, Chief Executive of the Queenstown Business Chamber of Commerce, says the issue is especially pressing in sectors and regions heavily reliant on card payments.

“In regions such as Queenstown, where card payments make up a large share of transactions for hospitality and tourism operators, a ban would have swift repercussions,” Fifield says. “A cap is a constructive, workable solution that maintains fairness for both consumers and businesses.”

The groups say proposed interchange fee caps coming into effect on 1 December will already reduce costs for merchants, and that the surcharge cap proposal complements those changes while allowing FinTech and Open Banking providers to grow and compete, as these platforms do not allow surcharging.

Further consideration needs to be given to other transactions via the Visa and Mastercard networks including foreign issued cards, and commercial debit and credit cards whose fees are significantly higher for merchants than personal cards.

They are calling on the Government to engage with industry immediately to implement practical caps rather than pushing through a policy that will have damaging unintended consequences.

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