Retail Payment System (Ban on Merchant Surcharges) Amendment Bill

on behalf of the Minister of Commerce and Consumer Affairs: I present a legislative statement on the Retail Payment System (Ban on Merchant Surcharges) Amendment Bill.

ASSISTANT SPEAKER (Greg O’Connor): That legislative statement is published under the authority of the House and can be found on the Parliament website.

Hon MATT DOOCEY: I move, That the Retail Payment System (Ban on Merchant Surcharges) Amendment Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill. At the appropriate time, I intend to move that the bill be reported to the House by 17 January 2026.

The Retail Payment System (Ban on Merchant Surcharges) Amendment Bill introduces a prohibition on payment surcharges. In the short term, the focus is on addressing surcharges in retail store settings. Therefore, the bill imposes an initial ban on surcharges for all in-store EFTPOS, Visa, and MasterCard payments. This will mean no surprises at the till for people, who currently feel like they are being charged to use their own hard-earned money. It also means consumers will be able to make a purchase knowing exactly what they’ll pay and how they’ll pay it, regardless of whether they choose to swipe or tap.

Surcharges are used by some retailers to recover the cost of merchant service fees from consumers. However, there can be harm to consumers if surcharges do not reflect the true cost to the retailer, and we know that this is extremely common in New Zealand. In fact, New Zealanders are paying up to $150 million in surcharges annually, including excessive surcharges that are ripping off Kiwi consumers by up to $65 million every single year. That’s nonsense. It demonstrates how confusing the surcharging system is, not just for customers but for businesses too. In some cases, a retailer doesn’t make it clear to consumers what the surcharge percentage is. It may be that they do not even know what they should be charging for different types of payment—it’s just that confusing to work out. And even when the surcharge percentage is made clear, consumers find it frustrating that the price on the shelf is not the price they end up paying. This makes it almost impossible for consumers to accurately compare retail prices and weakens competition between retailers.

What’s been done about this to date, you may ask, Mr Speaker. Back in 2022, the Retail Payment System Act gave the Commerce Commission powers to regulate New Zealand’s retail payment system. The Act empowers the commission to directly regulate surcharges, but its mandate is focused on cost reflectivity and preventing excessive surcharges. The commission is yet to utilise its powers to limit surcharges, and overseas evidence has shown that it would face difficulties if it tried to do so. This is because accurately calculating a cost-reflective surcharge is highly merchant-specific and requires clear, up-to-date information about their acceptance costs.

Setting, monitoring, and enforcing regulated caps have proven to be difficult at scale. Jurisdictions like the United Kingdom and Australia, who initially sought to rein in excessive surcharges through regulated caps, have since shifted gears. Surcharges on debt and credit cards are now banned outright in the United Kingdom, the European Union, and Malaysia, with a few very limited exceptions. The Reserve Bank of Australia (RBA) is also proposing to allow the operators of the EFTPOS, Visa, and MasterCard networks to impose no-surcharge rules from 1 July 2026. The RBA would then monitor the industry response and consider whether legislative intervention is necessary to ensure consumers receive the full benefit of a surcharge-free retail payment system.

It is time New Zealand followed overseas precedent. A ban on payment surcharges will remove hidden fees, improve retail price transparency, and enhance consumer shopping experience. The bill imposes an initial targeted ban on in-store EFTPOS, Visa, and MasterCard debit and credit payments. It applies to all cards equally, be they personal or commercial, domestic or foreign, physical or digital. We have expanded the ban’s coverage because we listened to feedback that businesses and consumers needed certainty. The ban is designed to be easy for retailers and consumers to understand, and it could be extended by regulations in the future to cover online payments and other payment networks if we see that is appropriate. The bill extends the commission’s existing enforcement powers to cover the ban. It also explicitly states that consumers are entitled to a refund from the retailer for any breach of the ban.

The ban will come into force shortly, after the commission’s latest interchange fee reductions, which take effect from 1 December 2025. Businesses are expected to save up to $90 million a year in payment costs as a result of these cuts, and the surcharge ban is the best way to ensure these savings are passed on to Kiwi consumers. The new regime is simple, effective, and flexible. It also supports the Government’s broader payments agenda. Open banking regulations are expected to be in force later this year and will help fintechs enter the payment market to compete with Visa and MasterCard. In particular, open banking is expected to encourage the growth of new payment methods like QR codes—quick response codes. Together, these reforms will revamp New Zealand’s retail payment system for the benefit of Kiwi consumers.

I have also heard clearly that the current system is not working well for retailers, who often receive complex or opaque billing information from their payments provider that does not clearly identify the fees associated with different card types. Retailers should be able to easily understand their payment costs. I expect the commission to work on improving this so that retailers can shop around for better deals and further lower their costs.

In conclusion, retail payments are central to the economy, but, for too long, Kiwi consumers have been subject to non-transparent pricing and retailer over-recovery. We know that up to $65 million of Kiwis’ hard-earned money should have been sitting in their back pockets but instead have been lost to extra fees that do not reflect retailer costs. This bill will make life easier for New Zealand consumers, who have told us clearly that they want the pesky sticker at the till to be gone. It also sets up a flexible, responsive regulatory framework that learns from overseas experience. This bill is a step in the right direction towards a modern, convenient, and internationally comparable retail payment system. Thank you very much, Mr Speaker.

The question is that the motion be agreed to.

This is a bill that Labour will be supporting to select committee because there are a range of things in here that are really important to New Zealand consumers. The Minister’s right. It is frustrating for New Zealand consumers when they go to the till only to be faced with a sticker that tells them that there will be a surcharge for their preferred method of payment that adds on costs that they weren’t expecting to pay on the sticker price. The principle behind this is that when the price is advertised as something and then you go to pay and it’s something else, it isn’t fair to the ordinary person in a shop, and it certainly doesn’t produce the kind of economy that we want for New Zealanders.

The New Zealand economy is in the grip of an affordability crisis where some industries are dominated by a few firms that are making excessive profits, and the Commerce Commission has been great at pointing out of the last few years just how much this is costing New Zealanders. And here they’ve done it again. They’ve said that consumers pay up to $150 million in payment surcharges each year, of which an estimated $45 million to $65 million is in excess of merchants’ reasonable costs. In other words, we have a problem here going on of rent-seeking by payments merchants—so the credit card companies’ banks that are charging far more than their reasonable costs and far more than the cost that it takes to administer these types of payments, and they are making that in profit at the expense of not only consumers but of small businesses.

This is where the rubber hits the road. This is where we have serious concerns about how this has been done, because the Labour Party did deal with this in 2022 when we reformed the payment systems legislation and gave the Commerce Commission extra powers to be able to set what would be reasonable surcharges. In fact, when the Commerce Commission did come up with its reasonable surcharges, they were lower than what this Government has in fact opted for in the end. In other words, this Government has been approached, it seems, in its consultation in the second round of regulatory impact statements, by Visa and MasterCard. They have, essentially, bought the argument that they need to leave some money in the system so that card merchants and banks can make a share of the profit that they are still making that is excess profit—and I will tell you about how that’s been levied against small business in a second—so that they can continue making that profit at the expense of small businesses and the consumers who buy from them, so that we can continue to have the system. But it won’t be transparent any more.

You and I, when we go to the till, if we’re paying with EFTPOS, we won’t know that some of those charges have been spread around the goods that we are buying. And if we’re paying with cash—perhaps we’re an older person who doesn’t use things like credit cards and EFTPOS but prefers to use cash—we will still be paying for the cost of those merchant fees that those businesses have to soak up. These are still costs on consumers. This is still not an answer to the rising cost of living that National promised at the election to prioritise, and that they keep telling us they are dealing with, whilst making legislative change which in fact makes it worse.

Now why, then, does the Labour Party think that this is something that should go to the committee? Well, as the commerce spokesperson for the Labour Party, I want to hear from small businesses exactly what this will cost them. I was speaking to a small-business owner today and she told me that over the last few months she has really been up against it. She charges a surcharge at the till. She hasn’t actually before; it’s only in the last six months. But it’s important to charge that surcharge because she’s paying up to $500 a month, and that’s taking out of the profit that she makes—about half of that in merchant fees. So she not only discourages people at the till from using that payment method—which is not, I think, something that was a policy intent of this bill but will, in fact, happen as more retailers see just how much this is costing them—but she’s also having to charge that and is now being told by the Government that she’s the problem; not Visa, not MasterCard, not the bank who is charging her for her small business for the privilege of eking out a living that she is trying to do in her community that is making a real difference there. For a pretty minor profit she has to pay $500 a month for the privilege.

We will hear, as a select committee, from a range of small businesses about just how much they are paying and how much it is taking out of their bottom line. I really hope that the Government is open to hearing that feedback, because the Commerce Commission has already suggested better fees and a better regime that can sit behind this, which will make it fairer. It was that Cabinet that rejected a fair regime for small business, and I hope that small businesses turn up and remind the National MPs on the committee that they are their voters, and they can do better.

Dr Lawrence Xu-Nan: Mr Speaker?

Dr Lawrence Xu-Nan.

Thank you.

ASSISTANT SPEAKER (Greg O’Connor): Now, the reason you need to seek the call is so the people in the gallery, in the booth, can know who is going to get the call.

Dr LAWRENCE XU-NAN: Ah, yeah. Sometimes there’s a little bit of a delay. I apologise, Mr Speaker.

The Greens are opposed to this bill. Now, there’s a reason for that. When this was first announced, part of me was like, “Oh, actually, you know what? That’s not too bad”—you know, people are not going to be paying for surcharges on payWave. And I thought, “Oh, maybe the Minister is doing something right.” And here’s the clincher: then the Minister of Finance came out to say, “You know what? Business should just pass that cost on to consumers.” And then I felt like “You know what? You ruined it.” You could have had something good there, but, instead, you are making the cost of living crisis worse by making businesses pass it on to the customers and the consumers.

Here’s the thing. At this stage, if you are in front of a till, if you are in front of an EFTPOS machine, and there is a surcharge, you have a choice: you can choose not to use contactless payment or you can choose to put your card in there and then do it the old-fashioned way and you don’t get surcharged. But, then, with this new system, we are not going to be seeing any transparency in terms of where some of the surcharges will go. Instead, businesses will be made—and particularly small businesses like your cafes, like your retails, like your dairies—to increase the overall cost on to the customers. We have heard small businesses opposed to this particular move. So it is a shame that we are seeing this bill addressing the issue but in an incorrect way.

So, yeah, the bill amends the Retail Payment System Act 2022 to prohibit payment surcharges on certain in store transactions, and that does include your contactless, it includes your EFTPOS, your MasterCard, your Visa payment network in store. And it allows for the Commerce Commission to enforce the ban. Yes, this does come on the back of the fact the Commerce Commission estimates that consumers pay up to $150 million in payment surcharges each year. But if we do remove that, how then would the Commerce Commission know what additional surcharges businesses are charging as a result of these fees, as a result of the surcharge fees?

One of the things I think that we needed to address—and it’s an unfortunate missed opportunity here that we’re not addressing it—is where these surcharge fees came from originally. What accountability measures do we have for the acquirer when they are negotiating in terms of payment and charges to businesses and, in most cases, to small businesses, around these surcharges that make small businesses have no choice—in order to meet rising costs and the rising cost of living—but to pass it on to consumers?

If the Government was really interested in tackling this issue and addressing this, I guess, nuisance for consumers, addressing this problem that has arisen for small businesses, the better way of doing this is to go after the acquirers and ban merchant service fees. That would have been the reasonable thing to do, and that would have been the more effective way of addressing the cost overall.

What we are seeing here is rather than actually just attacking and addressing the bigger issues, where we are holding large companies and banks accountable for something like this—because, let’s face it, banks are probably not making their money off merchant service fees. So we could have done something in the process of banning merchant services fees from acquirer. But, instead, the Government has decided to use a technical solution that bypasses the core issue altogether and does a patch fix that, essentially, makes it more expensive for consumers.

So the Greens will not support this bill, because we do not believe it addresses the real issue.

Thank you, Mr Speaker. This bill is about transparency in price, because usually what happens is that customers will see a price on the tag of the item that they are wanting to purchase, and when they go to the counter they realise there is a surcharge if they decide to make that payment using their card or digital wallet. We know that nowadays people are very commonly using these modes of payment. I was talking to a business association in the weekend and I heard that it’s only 10 to 15 percent of people who were using cash, and the rest of the payments are coming from an approved card. So it’s an issue that needs addressing. I’m really looking forward to hearing what submitters have to say in the select committee. Thank you.

Thank you, Mr Speaker. I rise on behalf of New Zealand First to support the Retail Payment System (Ban on Merchant Surcharges) Amendment Bill. When you go to purchase something—you see something on the shelf, you take that to the checkout—that’s what you should pay, and it’s as simple as that. We’re talking $150 million worth of savings here for consumers. I commend this bill to the House.

National is also delighted to be supporting the Retail Payment System (Ban on Merchant Surcharges) Amendment Bill. As the previous speaker said: consumers, at present, pay around $150 million annually in surcharges. Banning merchant surcharges is another great cost of living initiative by this Government.

Thank you, Mr Speaker. The good news is that I won’t be short-changing anybody on the time allotted for my contribution in the debate tonight. [Interruption] I can see that that’s lifted the spirits from the other side of the House immediately, which is great to hear because, right now, New Zealanders are faced with a cost of living crisis and this Government backs big banks, not small businesses that are doing it tough.

What this bill claims to do—and what we’ve heard in some of the very, very short, and very, very truncated, contributions from across the House—is that this bill amends the Retail Payment System Act 2022 to ban payment surcharges on certain in-store transactions, and the Commerce Commission estimates that consumers pay up to $150 million—$150 million—in payment surcharges every year. This bill proposes an initial targeted ban to address the consumer harm that surcharges cause in retail settings.

That’s from the general policy statement, but what does it actually do? What it actually does is it makes sure that everybody pays. It spreads that $150 million across the price of everything for everyone because banks will still charge the small businesses those fees, and those small businesses will need to recoup those costs so they will pass those costs on to consumers.

I’d like to use a term that my friends across the House are very familiar with—it’s the “up to” term. For example, tonight a pound of butter at New World costs $10.99. But if this surcharge is added at the shelf instead of at the till, that pound of butter will cost $11.49, and a kilo of mince will rise from $24 a kilo—

Hon Matt Doocey: Fake news! Straight out of the Duncan Webb school of fake news!

REUBEN DAVIDSON: —to up to $25.20 a kilo for mince. Even Minister Doocey looks unimpressed at that prospect.

Now, I’d like to offer another example, because what we’re talking about here is taking surcharges and tucking them away so that people don’t see them. This Government has very, very good stead in this term, in that space, through the application of administered inflation. We’ve seen car regos rise $25 and a further $25 next year. It now costs $50 more to file an appeal at court. These are the kinds of surcharges that this Government has inflicted on New Zealanders during a cost of living crisis. It does nothing for everyday Kiwis struggling to pay their bills.

Perhaps the most shameful of all, to single out in te Wiki o te Reo Māori—Māori Language Week—is that New Zealanders will now pay $30 more for a passport that this Government have wasted time and money to deprioritise “Aotearoa” and to place “New Zealand” ahead of “Aotearoa” on the front of that passport, and to charge New Zealanders, during a cost of living crisis, a further $30 for the privilege. I find that one fairly hard to explain.

What you will be pleasantly surprised to hear is that I do support this bill proceeding to select committee, but only so that it can get the proper examination that it deserves. Because a select committee will provide that level of scrutiny and the input from the small businesses that have had the buck passed to them. Because on this side of the House, we believe in fair competition, we believe in lower costs, and we believe in stronger small businesses.

Most of all, what we also believe in is that there is a cost of living crisis and that it’s the job of Government to address that for New Zealanders and that this Government is falling short in doing that. All this bill risks doing is removing the sticker off the EFTPOS terminal rather than doing anything meaningful for the cost of living crisis.

I’m so pleased that those interchange fees are coming down and we’re going to tidy up PayWave and surcharge bills across the country. It’s a good thing. I commend the bill to the House.

This could be a good idea but what a dog’s breakfast this Government’s made of it. Let’s have a look at it. We could actually support this bill to the select committee but, by crikey, if this is what you do with a good idea, goodness gracious—it’s how to make a good idea into an absolute mess.

I loved it when the Minister stood up on the other side of the House and said that this is great idea, in question time, to Nancy Lu, and said they’ve had overwhelmingly positive feedback. Did you hear about that? So I said, “Show me the feedback.” He had 33 emails. One was from Suze Redmayne saying, “Good job.”—actually, that was a text message. One was from his chief of staff, talking about social media feedback. One was positive, and 30 were overwhelmingly negative.

This is serious, though, because in fact this is going to be tough on small business. The Minister for Small Business thinks that his job is to make business smaller, and that’s what’s going on here. If you think about it, these small businesses—and I was in a small business on the weekend, it might have been a pub, and he griped no end about this Government and the fact that he has to absorb the cost of this or he has to put his prices up, and, of course, if you put prices up, customers fall off. Walk down Lambton Quay or any main street in any town and see what’s happening with small businesses. They are struggling, and this Government has just said to small business, “We’re stopping you passing on this cost. You should just suck it up.” Look at the number of liquidations that are out there.

This feedback is actually important because the select committee needs to think about things like this. One of 30 overwhelmingly negative pieces of feedback the Minister got said, “What a disgrace. You’re choosing to ban credit card surcharging rather than rein in those excessively abusing surcharges.” It is interesting that this is about retail, not about Ticketek, not about the—I don’t know, how much do they add to a Taylor Swift ticket? I don’t know. Seven or eight bucks? It’s not about Air New Zealand when you pay by credit card on Air New Zealand. Those transactions look like they’re going to go untouched. That’s big business. The other thing to note here is this: who asked for this change to be made? The credit card companies. A little red light should be flashing then. If the credit card companies want this, who’s going to make the money on it? The fact of the matter is that if it costs the same to pay by PayWave or by EFTPOS, you’ll choose the easiest, and let’s face it, PayWave is easier. Contactless is easier. But it’s more costly. What you’re actually doing is driving people to the most costly money handling system.

Matt Doocey talked about open banking and the idea that we might get some innovative payment systems coming through the open banking system. That might be good but we’re not there yet, but we can look at this. Another piece of feedback that went straight to Scott Simpson that he thought was overwhelmingly positive, “Many of us are sick of this rubbish from your Government. Honestly, I doubt we will continue to invest in the economic future of this country for much longer.” My question, further feedback, “How do we recover this amount of money without it coming out of our pockets and not putting prices up to cover this large sum of money?” They are genuine concerns.

Then, some retired people had some comments, and some of those retired people are a little bit parsimonious—those superannuitants. “I’ve never used PayWave.”, said one. “I don’t think I have to pay an extra fee when I can pay using my PIN. This is an option for everyone, but because people choose not to use it, we’re all going to have to pay.” These are the concerns we need to address. The fact of the matter is that the surcharges, the interbank charges, on these PayWave fees are excessive. When we were in Government we worked on this. This Government is continuing in that work, and that’s good. I commend you for cracking down on that and the Commerce Commission is at the forefront of that. But we need to address these concerns, and the Minister was not accurate when he said the feedback was overwhelmingly positive.

E te Māngai o te Whare. I support the Retail Payment System (Ban on Merchant Surcharges) Amendment Bill to select committee.

The question is, That the Retail Payment System (Ban on Merchant Surcharges) Amendment Bill be considered by the Finance and Expenditure Committee.

Bill referred to the Finance and Expenditure Committee.

Instruction to Finance and Expenditure Committee