An iconic Wellington ice cream brand has stopped offering Paywave after being hit with $20,000 in fees in just over a year.
Kaffee Eis put up notices at its cafes and ice cream parlours informing customers Paywave would no longer be available for those wanting the convenience of paying with a single tap of their card.
Managing director Karl Tiefenbacher said they realised recently the merchant fees they were paying were "getting a lot more than what we were used to".
They began offering paywave 16 months ago, and in that time the Paywave fees had exceeded $20,000 he said.
They had expected fees up to $5000 across their stores.
"It means that the costs we are paying just way outweigh the benefits of having Paywave," Tiefenbacher said.
They decided "the second that we saw the numbers" they would get rid of the service.
He said customers had seen their signs and were aware the costs to the merchant were "ridiculous", so feedback had been "really positive".
"A lot of people realise that merchants are having to hold the cost of Paywave and that it's significant."
The only disadvantaged customers would be those who used Apple Pay and did not carry any cash or cards with them, but he believed they were a small percentage of the customer base.
Retail NZ's general manager of public affairs Greg Hartford said credit cards and Eftpos were essential tools for any retail business these days.
"Customers want to be able to pay using their cards, and increasingly want to be able to use contactless cards or things like ApplePay to make their purchases," he said.
"New Zealand retailers typically don't pay for standard Eftpos transactions, while they do pay a fee every time a customer uses a credit card or a contactless debit card.
"Many retailers have chosen not to accept contactless payments because there is a cost for them in doing so, while there is no cost if that debit card is inserted into a machine and treated like an Eftpos transaction."
Many businesses pay a single rate for all credit and contactless debit transactions, meaning they are charged the same whether the customer was using a credit card or not.
"Unbundled pricing, where the merchant pays 'interchange' plus a 'bank acquiring fee' is becoming more common, and typically means that merchants pay less for accepting contactless debit," he said.
This did not include credit.
"Retail NZ does an annual payments survey, which has previously shown that New Zealand merchants pay substantially more for credit and contactless debit transactions than merchants in Australia and the UK.
"Visa and Mastercard made some reductions to maximum interchange rates in April last year."
Retail NZ is currently doing research to figure out the impact of this on the market.