Customers angered by extra credit-card charges want action

Consumer power is forcing some retailers to back down from imposing credit card surcharges.

Retailers are typically charged 1.5 per cent to 2 per cent for every credit-card transaction, but some charge customers as much as 5 per cent for the privilege of paying by card.

Many independent petrol stations had been imposing surcharges but gave up because of the hassle arguing about them with customers.

An attendant at Tarewa Road Caltex, in Whangarei, said the surcharge was dropped because customers complaining about it held up the queue.


Two nearby petrol stations had also dropped the surcharge.

The Herald on Sunday is launching a campaign to bolster that consumer pressure.

Impact PR research showed that 90 per cent of customers would stop shopping at their regular store if a 3 per cent surcharge were added.

But surcharges are everywhere, from beauty spas to taxi companies. Last year Mastercard accused retailers of profiteering from surcharges and called for a cap to be set.

The Commerce Commission is surveying more than 3,000 businesses to assess the situation. Surcharges have been allowed only since 2009, when the commission struck an agreement with credit-card companies Visa and MasterCard.

That deal allowed retailers to recover the fees by, in turn, charging extra on payments customers made using credit cards.

The agreement allowing credit card surcharges was intended to save retailers as much as $80 million and enable them to charge customers less for goods and services.

But commentator Bernard Hickey said that had not happened. "I don't know why they thought that would happen.


"If I was a retailer, and my costs dropped, it would just be a two-way ticket to increased profits."

It is understood the Commerce Commission has received several complaints. Its survey is now complete and is being analysed.

The commission is specifically investigating Air New Zealand, which charges $4 on all domestic bookings, $6 on transtasman and Pacific bookings, and $17.50 on most international flights. For domestic travel, that can equate to almost 5 per cent.

Hickey said: "Air New Zealand is subsidising more competitive international routes by reaping super-profits from credit-card charges on domestic flights."

Air New Zealand rejected that suggestion and said it was recouping less than it was spending on merchant fees.

Hickey said Air New Zealand was not alone - Jetstar imposed a $5 surcharge.

Although taxis, buses, hotels, government departments and service stations were surcharge hotspots, Hickey said online booking sites were the worst because there were limited options for consumers and "it's pretty clear this suits sectors where the retailer has a lot of market power or the purchasing channel gives consumers no choice".

Consumer chief executive Sue Chetwin said some businesses were using surcharging as a way to get extra money from consumers. "Air New Zealand has quite draconian surcharges," Chetwin said.

John Albertson, of the Retail Association, said flat surcharges could create an uneven situation.

"On a $69 airfare, the $4 surcharge seems a lot. But if you fly from Dunedin to Auckland and you don't get a special deal you might pay $250 and $4 is probably reasonable.

"We have to be careful we don't get carried away."

He said there was continued argument about whether, without surcharging, customers who did not use credit cards subsidised those who did.

He said that mobile credit card facilities and those online were more expensive.

The anatomy of a credit card transaction
1. Customer makes a $100 purchase and pays with credit card.
2. Retailer processes payment and waits for authorisation.
3. Customer's bank bills customer $100.
4. Customer pays $100.
5. Customer's bank charges $1.70 interchange fee and pays retailer's bank $98.30.
6. Retailer's bank charges 50c acquiring fee and pays retailer $97.80.

Tell us who hikes it up: Have you been stung by an unexpected credit-card fee lately? The Herald on Sunday wants to expose companies that charge the largest fees. Tell us on We'll compile a list there. If you don't have a Facebook page, drop an email to Susan Edmunds at