Consumer NZ Calls For An End To The Surcharge Swindle

Consumer NZ is calling on the Commerce Commission to consider a ban on card payment surcharges due to growing concerns about excessive and hidden fees.

While the Commission is considering lowering interchange fees – to reduce merchants’ costs for accepting card payments, – Consumer says there’s no guarantee this will reduce card surcharges for consumers, and that should be the priority.

Currently, there are no regulations in New Zealand on surcharges, only guidelines. The guidelines recommend surcharges be transparent, avoidable and not excessive. Unfortunately, these recommendations are often ignored, to the detriment of shoppers.

“The surcharging situation in New Zealand is a mess. We have received hundreds of complaints showing merchants are not complying with the guidelines. It’s time to introduce new surcharge rules,” says Consumer acting head of research and advocacy, Jessica Walker.

Although the Commission has said it will consider some form of surcharge regulation, an outright ban doesn’t appear to be one of the options being considered. Yet Consumer thinks a ban would be a simple and effective solution, with the benefits outweighing the risks.

“Less thought would be required about what card to use, whether to swipe, insert or tap; what the surcharge amount is and whether there’s a way to avoid the surcharge.

“You could just leave the house with your phone in your pocket, knowing you wouldn’t have to pay a hefty surcharge for the convenience of not carrying any cards. A ban makes things simpler for merchants too,” Walker says.

Issues with surcharging

Complaints to Consumer about surcharges include:

Excessive fees: Merchants are charging well over what it costs them to accept the card payment. In the worst cases, card payment surcharges have exceeded 20%. The Commission estimates New Zealanders are paying up to $65 million per year in excessive surcharges, with Mastercard estimating this figure to be $90 million.

Lack of transparency: Some merchants don’t mention the fact they add surcharges. Others have terminals that simply state "surcharge applies", without specifying the amount.

Fixed fees: Some merchants charge flat fees rather than percentages, which don’t always reflect their actual costs.

Hidden fees: Additional costs, like service fees, are often bundled with surcharges, confusing consumers.

To address these issues, Consumer is calling on the Commission to consider a ban on surcharges.

The benefits of a surcharge ban

Transparency: A surcharge ban would eliminate unclear and hidden fees, allowing consumers to more easily compare prices.

Consistency: Consumers would have a consistent experience across merchants, with no nasty surprises at the counter.

Simplicity: A ban would be easy for consumers and businesses to understand and easy for the Commission to enforce.

Fairer: A ban would incentivise merchants to search for better card deals that allow them to reduce their payment costs. While surcharging is allowed, there’s no incentive for merchants to do this. Lower interchange fees also mean businesses could more easily absorb payment costs.

Encourages competition: Transparent pricing would allow consumers to shop around more easily, fostering competition.

Alignment with other jurisdictions: The United Kingdom and European Union have banned surcharges, proving such a ban can work.

The case for banning surcharges in New Zealand is strong.

Consumer lodged a submission with the Commission this week supporting further interchange regulation and calling for the Commission to consider a ban on surcharges.

We urge anyone else who is fed up with surcharges to let the Commission know by 5pm on 18 March 2025 using this simple online form.

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