Surcharging — adding a fee when a customer pays by card — became widespread in New Zealand as contactless payment grew, and it became contentious because the fees charged frequently bore little relationship to what acceptance actually cost the retailer.
That has now changed. Following reform of the retail payment system, surcharging on in-store electronic payments has been prohibited, and retailers who have not adjusted need to.
What the ban covers
The prohibition applies to in-store payments made with Visa and Mastercard debit and credit cards, and with EFTPOS. For those payments a retailer cannot add a surcharge.
The reform sits alongside earlier Commerce Commission action reducing the interchange fees that merchants pay to accept Visa and Mastercard payments. The policy logic is that merchant costs were reduced first, and the surcharge that was supposedly recovering those costs was then removed.
What remains outside the ban
Several categories are not covered, and retailers should confirm the current position for their own payment mix rather than assuming:
- Online payments are not covered by the in-store prohibition.
- Foreign-issued cards, which carry different interchange arrangements.
- Prepaid gift and travel cards.
- Cards on other networks such as American Express and UnionPay, which sit outside the regulated schemes.
The distinction matters operationally, because a terminal configured to surcharge indiscriminately will now be applying a fee where it is prohibited. Terminal configuration is the practical compliance task, and it needs to be checked with your provider rather than assumed.
Recovering the cost properly
Payment acceptance still costs money, and the ban does not change that. What changes is how the cost is recovered.
The lawful and straightforward approach is to build acceptance cost into your pricing, as you would any other cost of doing business. This is what most retailers in most markets do, and it has the advantage of being simpler to administer and less irritating to customers than an itemised fee at the till.
Retailers concerned about margin should look first at what they are actually paying. Merchant service fees vary considerably between providers and are negotiable, particularly for businesses that have grown since the agreement was signed. Many small retailers are on legacy pricing well above what is currently available, and reviewing it is a faster win than a surcharge ever was.
Practical checklist
- Confirm with your payment provider that terminal surcharging is switched off for the payment types covered by the ban.
- Remove signage advertising card surcharges.
- Check your point of sale, invoicing templates and online checkout for surcharge logic that may apply automatically.
- Review your merchant service agreement and current effective rate, and get a competing quote.
- If you accept payment types outside the ban and intend to continue surcharging those, make sure disclosure is clear and the amount reflects actual cost — misleading representation risks Fair Trading Act liability separately.
What to tell customers
Retailers who have been surcharging for years sometimes worry that absorbing the
cost will be read as a price rise. In practice customers rarely notice the removal of
a fee they resented, and the businesses that made a small point of it — a note at
the counter saying card surcharges have been removed — generally got goodwill out
of a change they had no choice about.
What does attract complaints is inconsistency: a surcharge removed in store but
still applied online without explanation, or a fee that disappears from the terminal
but reappears on the emailed invoice. Make sure every channel tells the same story,
and that staff can explain the position without guessing.
The wider direction
The retail payment system is subject to ongoing regulation, with the Commerce Commission holding a monitoring and enforcement role over merchant fees and the operation of designated networks. Further adjustment to interchange rates and scheme conduct is an active area rather than a settled one.
The Commerce Commission publishes its retail payment system decisions and guidance free at comcom.govt.nz, and it is the authoritative source for the current position. For a retailer, the sensible posture is to check the Commission’s guidance directly rather than relying on advice from a payment provider with an interest in the answer.
General information only, not legal advice. Confirm current requirements with the Commerce Commission or your adviser.
