Claims that New Zealand’s planned ban on in-store card payment surcharges is “dead” are politically charged, but the Government maintains the policy is still on track for a May 2026 rollout.
The Retail Payment System (Ban on Merchant Surcharges) Amendment Bill has passed its first reading in Parliament and is currently before the Finance and Expenditure Committee.
If passed, it would prevent businesses from adding surcharges to in-person EFTPOS, Visa, and Mastercard payments, including contactless, swipe, insert, and digital wallet transactions.
The Government says the move could save consumers up to $150 million annually, including around $65 million in excessive surcharges, while improving price transparency at the checkout.
A key part of the policy is the reduction of interchange fees — charges between banks that make up a large share of merchant payment costs.
These fees are set to be capped from late 2025, lowering the cost of accepting card payments and reducing the need for surcharges. Whether those savings are fully passed on will be critical to the policy’s success.
Retail groups and opposition parties argue the change could shift costs rather than remove them. Retail NZ Chief Executive Carolyn Young says many businesses are already under pressure and may be forced to raise prices to recover costs.
“Retailers have been clear that the proposed card surcharge ban would have been yet another blow to the struggling sector after a tough trading environment that has lasted several years,” Retail NZ Chief Executive, Carolyn Young, says.
“Many retailers are not in a position to absorb the Merchant Service Fee. It would have meant most stores would have needed to increase their prices to offset the added costs, which would have affected all customers regardless of how they’re paying, and also have an inflationary effect.”
Consumers have become increasingly sensitive to surcharges as contactless payments become standard. Fees of 1–2.5% can add noticeable costs to everyday purchases such as groceries, fuel, and takeaway food. Removing them would simplify transactions and provide clearer pricing, though any cost recovery through higher base prices would spread those costs across all shoppers.
Despite this, critics argue the policy has stalled, pointing to delays in the parliamentary process and suggesting it may not proceed in its current form.
As of March 2026, surcharges remain legal, provided businesses follow guidance from the Commerce Commission on transparency and cost-reflectiveness.
Enforcement also remains an open question. If implemented, oversight would likely fall to the Commerce Commission, but monitoring compliance across thousands of retailers may prove difficult.
Businesses could also respond by introducing minimum spend requirements or adjusting pricing structures to recover costs indirectly.
Internationally, similar policies have been introduced in markets such as the United Kingdom and the European Union, where surcharges on many consumer card payments have been banned. Evidence suggests that while visible fees disappear, costs are often absorbed into overall pricing.
The timing adds further pressure. With ongoing cost-of-living concerns and a fragile retail sector, the Government faces a balancing act between delivering consumer savings and avoiding additional strain on businesses. Any further delays or amendments could push the proposed May 2026 start date out of reach.
For now, the surcharge ban sits in legislative limbo — neither abandoned nor assured. Its future will depend on whether cost reductions materialise and whether the Government can balance consumer expectations with the realities facing retailers.
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