Stop the surcharge swindle

The Retail Payment System Act, which passed into law in November 2022, was expected to save businesses $105 million a year and mean lower surcharges for customers too. We're concerned these savings aren’t always being passed on.

“Businesses shouldn’t charge their customers more than what it costs them to accept a card payment. Unfortunately, as shoppers, we have no way of telling what businesses are getting charged so it’s difficult to tell if we’re being ripped off,” said Jessica Walker, Consumer NZ campaigns manager.

If you insert or swipe a debit or Eftpos card when paying in person, you should not incur a surcharge. However, if you make a contactless payment with a debit card (by tapping it or using it online) you could incur a surcharge, but that fee generally shouldn’t be more than 0.7%. If you pay by credit card, you shouldn’t generally be charged more than 2%. In many cases, you should be charged less than 2%.

Retailers should not be profiting from surcharges, but we're concerned many are.

“Big businesses usually pay lower fees for accepting card payments because of the volume of transactions they process, and this should be reflected in the surcharge passed on to the customer. If, for example, you pay your power bill by credit card, you’re only likely to have to pay a surcharge of around 0.7%, or less.

“This lower surcharge is good to see, but the same can’t be said for all businesses.”

For example, earlier this year we received numerous complaints about Ticketek, a big player in the event ticket market, which at the time was charging a payment processing fee of up to 3.5%.

“We asked Ticketek why its payment processing fee was so high. Ticketek told us it had reduced its surcharge to a standard 3% and would lower it further. However, we’re still receiving complaints about Ticketek charging 3.5%. We think this is excessive.

“In our view anything higher than a 2% credit card surcharge, or a 0.7% contactless debit card charge could be excessive.”

Whenever a retailer is applying a surcharge, it must be clearly displayed, and retailers should offer at least one payment method that does not incur a surcharge.

It has been a year since the law changed, and we think there is no excuse for businesses continuing to charge customers excessive surcharges.

Examples of excessive surcharges

We asked people to share examples of excessive surcharging so it could gauge the size of the issue.

“So far we have received over 80 complaints from people who said they have incurred an excessive surcharge when making a card payment,” said Walker.

A patient at Ponsonby Dental Boutique told us she paid a $5 surcharge on an $80 dental bill – that’s a whopping 6.25% surcharge.

“The client tapped her credit card, knowing she would be paying a surcharge, but being stung by 6.25% is totally unreasonable.”

Judging by the volume of complaints, parking providers are among the worst surcharging offenders.

“Some parking apps reportedly charge card fees in excess of 8%.”

High surcharges also seem to be commonplace at accommodation providers, with multiple complaints of surcharges of 3% at hotels and lodges around the country.

“If you come across a surcharge that you think is excessive, ask the business why it’s so expensive. If you’re not happy with their explanation, make a complaint to the Commerce Commission. Ultimately, we want to see an end to excessive surcharging.”

The Commerce Commission has been engaging with merchants to ensure they understand their obligations when it comes to surcharging and do the right thing by their customers.

We will continue to make noise about surcharges, to give this issue the visibility it deserves.