ACT proposes balanced fix to surcharge ban to protect consumer choice and business fairness

ACT Commerce and Consumer Affairs spokesperson Dr Parmjeet Parmar has written to the Chair of the Finance and Expenditure Committee and the Minister for Commerce and Consumer Affairs proposing a targeted amendment to the Retail Payment System (Ban on Merchant Surcharges) Amendment Bill to ensure fairness for both consumers and businesses.

“The issue of payment surcharges is more complex than it looks. Small price differences at the checkout reflect real costs imposed on merchants by payment providers. We need to make sure that in trying to protect consumers, we don’t end up unintentionally making them worse off or unfairly punishing businesses,” says Dr Parmar.

“The principle behind the Government’s proposed ban on merchant surcharges can be justified. Consumers expect that the price they see advertised on the shelf is the price they will pay at the checkout.

“Where a business offers no free alternative to contactless payments such as inserting or swiping a card, or paying by cash, then there is no way for New Zealanders to avoid paying more than the advertised price – so in the interests of transparency, banning the fees can be justified.

“But in situations where an alternative option is available, a business that wishes to do so should be able to recoup the costs of providing a more convenient form of payment.

“If retailers are forced to absorb every payment fee without being able to offer alternatives, some may stop offering contactless or credit card options altogether – or simply raise prices for everyone.

“The effect of this is that higher costs are forced on those who previously chose not to pay for a contactless option, or struggling businesses are pushed to cut their narrow margins even further.

“Consumers expect the price they see advertised to be the price they pay. Where there’s no free alternative, banning the surcharge makes sense for transparency. But where there is a choice, it’s wrong to punish businesses for offering convenience.

“Removing all flexibility would mean higher prices for everyone, less payment innovation, and even tighter margins for small retailers. Regulation should promote choice and transparency – not crush them.”