Surcharges on PayWave card payments are set to become a thing of the past. Photo / Sharepix
Some Hawke’s Bay shops, cafes and eateries may stop offering contactless payment options like PayWave when a ban on card surcharges comes into effect, a retail leader says.
The Government this week announced a ban on most card payment surcharges across New Zealand by May 2026, saying the surcharges are “a hassle and an unwelcome surprise when shoppers get to the till”.
Consumer NZ has praised the move as a “no-brainer” as Kiwis will be able to tap their card or phone without surcharges.
However, retail advocates have been quick to point out that businesses still have to pay a merchant service fee when contactless cards (like Visa PayWave and Mastercard) are used - which the surcharge is designed to cover.
Napier City Business general manager Pip Thompson said she was fine with the Government wanting to remove the surcharges, but she was concerned about businesses having to pick up the bill.
“They are going through a rough enough time as it is,” she said.
“The PayWave options are a really quick and easy option for us to go and pay for something, but that might be taken away, because why would the business owner want to pay for that when they can’t on-charge?
“We are going to go backwards.
“They will remove the flexibility and the convenience of us just using our phones and going ‘ding’.”
She said, alternatively, business owners would be forced to up prices to absorb the cost.
There is no merchant service fee for Eftpos payments, such as when you insert your card.
Thompson questioned why banks weren’t doing more to support local businesses with reducing the merchant service fee (for which the surcharge covers).
“I think we have cut the pie only in half, and they need to sort the other side of the pie out, so to speak, and go to the banks and say how are you going to help this process?”
Banks say they do not receive any benefit from surcharges, and the merchant service fee is required - part of which goes to Visa and Mastercard.
“New Zealand is unique globally in that our domestic card payments network [Eftpos], which is used for Eftpos cards and debit cards when they are inserted, is free for merchants, even though there is a cost to run this network,” an ANZ spokeswoman said.
“However, as in other jurisdictions, there are fees for accepting other means of payment including PayWave, credit and international cards.
“ANZ recovers its costs of providing our customers with payment facilities through a merchant service fee.”
She said the average merchant service fee was 1% of a transaction.
A merchant service fee is made up of ‘scheme fees’ and ‘interchange fees’, as well as some other costs.
The ‘scheme fees’ portion goes to either Visa or Mastercard (dependent on the card used), and the ‘interchange fees’ portion goes to the bank to cover costs such as fraud prevention, handling disputes, and authorising transactions.
The merchant service fee is initially paid to a ‘payment acquirer’ which can either be a bank or another provider like Windcave.
“Banks don’t set or require surcharges - they are added by retailers/merchants at the point of sale,” a BNZ spokesman said.
“If it’s more than what they’re charged in fees, they keep the difference. Not the bank, not the acquirer, and not the card company.”
Vinci’s Pizza in Napier owner Vincent Michaelsen said he was supportive of the surcharge ban.
“We do PayWave and we don’t do surcharges,” he said.
“I don’t think there is necessarily a right or wrong [on whether you do surcharges or not].
“But my perspective, from a customer angle, is that I just want to make it easy.”
He said he felt that was the best decision for his business.
“I think as a business operator, you need to know your costs and make sure that it is covered in the back end.”
However, he said the best solution would be tackling the problem from both ends - with no surcharge and also no merchant service fee for businesses.
Cool Toys in Napier owner Glen Chan said he expected most retailers would have to build the extra cost into their pricing, after the surcharge ban.
“It tallies up. It really mounts up,” he said, of covering the merchant service fees.
He said he offers contactless payments with a surcharge currently, and a problem with potentially removing PayWave as an option in future was that customers liked and were used to it.
Adore Collection in Napier co-owner Sally Holyer said they did not charge a surcharge on contactless card payments.
“Yes it costs [us] but we find, especially when it is really busy in the summer in the cruise season, it speeds things up so much that is actually worth us doing.”
Gary Hamilton-Irvine is a Hawke’s Bay-based reporter who covers a range of news topics including business, councils, breaking news and cyclone recovery. He formerly worked at News Corp Australia.