Retailers in New Zealand are raising concerns that a planned ban on card payment surcharges could lead to higher prices for consumers and tighter profit margins for businesses.
The warning comes from Retail NZ and several small business owners, responding to the Government’s Retail Payment System (Ban on Merchant Surcharges) Amendment Bill, which proposes to stop most retailers from charging extra fees on card payments.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Merchants face cost gap without card surcharge fees
Retail NZ, a leading industry group representing domestic stores, says many members will struggle to absorb the costs of merchant service fees — the charges retailers pay banks and card networks to process card payments.
Retailers currently offset these fees by levying surcharges on customers who pay by credit, debit or contactless card. Under the proposed ban, these surcharges would be prohibited for in-store payments made with Visa, Mastercard and EFTPOS.
Industry representatives describe the surcharge ban as “poorly targeted” and rushed, and warn it could create unintended consequences. Retail NZ chief executive Carolyn Young said that without the ability to pass on payment processing fees, many businesses will have to find other ways to cover these costs.
Small retailers report that card fees can represent a significant share of their margins. One Wellington office supplies owner told Retail NZ his business currently passes on these fees via a surcharge because absorbing them would reduce profit by nearly 20 per cent.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataHe said that removing surcharges would force him to increase prices to sustain operations.
Potential impact on pricing and consumer behaviour
Retailers say that losing the ability to charge card surcharges could lead to price increases across the board, affecting all customers regardless of payment method.
This concern reflects broader industry feedback to the surcharge ban, with some survey data indicating that many retailers favour retaining consumer choice in how payment costs are managed.
The New Zealand Government’s rationale for the ban is to improve pricing transparency and reduce what consumer advocates say are “hidden” costs at the till. Supporters of the policy argue that card payment surcharges disproportionately affect shoppers and create uncertainty at checkout.
Consumer groups have highlighted that a majority of the public supports the ban, citing research where more than 50 per cent of respondents favoured removing surcharges.
If enacted, the ban would align New Zealand with other markets that have restricted in-store card payment surcharges to boost transparency and fairness for consumers.
However, there is ongoing debate over the trade-offs for businesses, particularly small and medium enterprises that rely heavily on card transactions.
Legislative progress and industry response
The surcharge ban is part of an amendment to existing retail payment legislation and has progressed through initial parliamentary stages.
Some business groups, including chambers of commerce, have welcomed a pause in legislative debate to allow more time for consultation on the potential economic impact.
Government officials have said the policy is still under consideration and that they aim to understand the full effects on businesses before finalising the ban, which was originally targeted for implementation in mid-2026.
Retailers and industry associations now face a period of heightened engagement with policymakers to seek adjustments that might reduce cost pressures, for example through further reductions in payment processing fees or phased implementation measures.
