Northland businesses brace for price increases with surcharge ban

Abby Semb doesn't charge surcharges at the Village Cafe in Kerikeri, instead her business absorbs the cost of bank fees. Photo / Jenny Ling

Northlanders will have to steel themselves for yet another price hike when the Government’s surcharge ban comes into play.

That’s what some Northland retailers and business leaders believe after the recent Government announcement that will see surcharges on in-store card payments banned from next May.

The change will apply to payments made in-store using Eftpos, Visa and Mastercard but not online purchases or other international card schemes.

Northland Chamber of Commerce chief executive Leah McKerrow said though the proposed ban was targeting businesses, “the consumer ends up paying for it”.

“The small businesses are the ones incurring the costs because the banks are charging the cost.

“Unless they’re moving that onto the consumer, it’s the small businesses that are wearing it, which seems entirely unfair.

“This is not something our businesses can tolerate and wear.

“A lot will be sitting back thinking ‘is it worth it?’”

Banks and payment providers charge businesses a fee for processing transactions, especially when using credit cards or contactless payments such as PayWave.

Surcharging allows businesses to recover those costs – usually 2 to 2.5%.

Commerce and Consumer Affairs Minister Scott Simpson said New Zealanders were paying up to $150 million in surcharges every year, including excessive surcharges of up to $65m.

Shoppers would no longer be penalised for their choice of payment method, “whether that’s tapping, swiping or using their phone’s digital wallet”, he said.

“Surcharges are a hassle and an unwelcome surprise when shoppers get to the till.

“That pesky note or sticker on the payment machine will become a thing of the past.”

McKerrow said banks should “make sure they don’t place the burden on small business”.

Northland Chamber of Commerce chief executive Leah McKerrow said banks should not be burdening small businesses with surcharge fees.

Particularly because New Zealand banks are among the most profitable in the world, she said.

Collective profits for the sector rose 0.25%, about $18m, to a record $7.22 billion in 2024.

“Where is the initial charge coming from?” McKerrow asked.

“It’s coming from the banking sector.

“Does the banking sector make a lot of money? Yes, it does.

“Businesses are doing it tough as it is – they certainly don’t need to be subsidising the banks.”

The Old Packhouse Market owner Judy Hyland said paying fees on several Eftpos terminals at her Kerikeri business amounted to “a lot of money”.

“We’ll put prices up.

“We’ll have to recoup the costs somehow.

“If we can’t do it when we’re doing the transactions it will have to go onto the food costs.”

However, Hyland said the ban was positive “because some retailers take advantage of it”.

A Consumer NZ survey found surcharges as high as 3% with some businesses making headlines for charging even more.

“If they could monitor retailers so they were only doing what they were supposed to do that would be the best solution,” Hyland said.

“Then it’s user pays.

“But it’s when people take advantage and put surcharges on when they shouldn’t then we’re all paying for that.”

The Village Cafe in Kerikeri is bucking the trend.

Owner Abby Semb said her business doesn’t charge surcharges at all, instead her business absorbs the cost.

Semb considers surcharges an “operating cost” just like paying for power and wages.

“When I took over the business two years ago it didn’t have PayWave or credit card facilities.

“When we added them, I didn’t want to create any reason for discouraging customers.

“People who come to us are always surprised, as it’s [surcharging] become standard practice.”

Semb said she had an “inclusive package” with her bank that charged a flat rate based on how many transactions go through the machine, whether that’s PayWave, Eftpos or credit cards.

Her business pays around $400 a month in fees during busy summer periods, and around $250 during quieter winter months.

“It doesn’t matter whether you swipe or put a PIN in, the cost of the transaction is the same.”

The Retail Payment System (Ban on Surcharges) Amendment Bill is expected to be introduced by the end of this year.

The Commerce Commission will oversee enforcement of the ban. If businesses don’t comply, consumers will be entitled to a refund.

Semb questions whether the Government is “going about it the right way”.

She pointed to recent changes to KiwiSaver which will see the default contribution rate for employees and employers increase from 3% to 3.5% starting April next year, and 4% from April 2028.

“Small businesses seem to be fronting up with costs for everything.”

How to avoid surcharges

• Swipe your Eftpos card and use your PIN
• Swipe or insert your debit card and use your PIN
• Use cash

Source: Consumer NZ

Jenny Ling is a senior journalist at the Northern Advocate. She has a special interest in covering human interest stories, along with finance, roading, and social issues.