Retailers have warned that the benefits from the proposed card surcharge ban will be short-lived as new issues might emerge and affect costs.

According to Retail NZ, banning surcharges will improve the retail experience for customers but risks prices being increased to cover the costs of accepting credit card payments.

The government on Monday proposed to ban surcharges on in-person domestic debit and credit cards from May next year. The ban, however, does not affect online sales, pre-paid and international credit cards. 

While removing surcharges from in-store purchases can be a positive move, Retail NZ CEO Carolyn Young believes the wider issue of pricing needs to be considered.

The surcharge ban will likely see an accelerated decline in eftpos payments by consumers and a shift to contactless debit and credit cards, Young elaborated.

In this case, there will be a corresponding increase in the fees paid by retailers, so the benefits in the reduction of the interchange fee will be short-lived, especially for SMEs, she added.

“Considerable work will be needed to ensure that terminals have the ability to distinguish between domestic debit and credit cards, and commercial or international credit cards, and charge differential surcharge rates,” Young stated. 

Retail NZ’s position is that all cards should be treated equally, she stressed.

“We will be seeking more details on the surcharge changes, particularly around commercial credit cards, which are not mentioned in today’s announcement, and possible future changes to online transactions,” Young said.

According to the Commerce Commission, shops in New Zealand typically charge consumers 0.7 per cent for debit card payments and up to 2 per cent for credit cards. The regulator estimates consumers pay about $150 million in surcharges each year.