Proposed ban on merchant surcharges

The Government recently introduced the Retail Payment System (Ban on Merchant Surcharges) Amendment Bill (Bill), which if passed would impose an initial ban on surcharges for all in-store EFTPOS, Visa and Mastercard debit and credit payments.
The ban would include contactless debit and credit card payments, would make no distinction between personal or commercial use, and would include cards issued in New Zealand or overseas.
The Bill would amend the Retail Payment System Act 2022 to address what is seen as the consumer harm these surcharges cause in retail settings. The Commerce Commission has estimated that out of the $150 million consumers pay each year in surcharges, between $45 million to $65 million of these surcharges likely exceed merchants’ reasonable payment costs, with the average surcharge almost double the average fee paid by the merchant.
This is in part due to how difficult the surcharge system is for businesses to work out, leading to confusion as to what they should be charging for different types of payments, resulting in a flat rate being charged across all types.
The Commerce Commission estimates that approximately 20% of New Zealand businesses surcharge, while the remainder absorb the cost as part of doing business.
Internationally, surcharges on debit and credit cards have been banned in the UK, Europe and Malaysia. The Reserve Bank of Australia (RBA) is also moving to allow operators of the EFTPOS, Visa, and MasterCard networks to impose no-surcharge rules from 1 July 2026. The outcome will be monitored by the RBA, and if necessary, followed up with legislation to ensure consumers receive the full benefit.
The Bill would enable the Commerce Commission to enforce the ban and issue corrective notices, or where there is a breach to seek a pecuniary penalty, and would be given regulation-making powers to extend the ban to cover online payments and other payment networks.
One of the objectives of the Bill relates to its timing alongside the Commerce Commission’s latest interchange fee reductions, which will come into effect from 1 December 2025. The Commerce Commission is empowered to regulate interchange fees businesses pay to accept Mastercard and Visa payments, and these latest reductions are expected to save businesses up to $90million a year in payment costs. It is these savings that the Government wants to see passed on to consumers through the surcharge ban.
The changes proposed by the Bill are intended to provide a simple and flexible regime leading to greater price transparency and put an end to additional surcharges being revealed at the till. Once passed the Bill would allow for a one-month implementation period, with the ban being in place by May 2026.