Retail NZ, the Auckland Business Chamber and other chambers of commerce have proposed a different approach to the merchant surcharge ban to ensure both customer benefits and business viability.

The organisations said that a blanket ban on in-person domestic debit and credit cards would unfairly shift costs onto all customers and would hit SMEs particularly hard. They warned that the impact would be significant, given 97 per cent of New Zealand businesses are small and medium-sized with thin margins.

To minimise such impact, the groups propose placing a 0.5 per cent cap on debit card surcharge and a 1 per cent limit on personal domestic credit card surcharge.

Retail NZ CEO Carolyn Young considered the blanket ban a blunt tool that will damage both consumers and businesses.

“Removing the ability to recover legitimate payment processing costs will force retailers to increase prices across the board,” Young said. “That is bad for consumers, bad for businesses and bad for innovation.”

“Sensible caps rein in excessive surcharging while allowing retailers to recover genuine costs. We need smart regulation, not knee-jerk bans,” she added.

The groups said the proposed caps would complement the interchange fee caps that take effect on December 1, while allowing FinTech and Open Banking providers to grow and compete, as these platforms do not allow surcharging.

Further consideration needs to be given to other transactions via the Visa and Mastercard networks, including foreign issued cards, and commercial debit and credit cards, whose fees are significantly higher for merchants than personal cards.

The organisations call on the Government to engage with industry to implement practical caps rather than pushing through a policy with unintended consequences.