Retail Payment Surcharging Under Fire
by: Katrina Hammon, Partner
The information in these articles is general information only, is provided free of charge and does not constitute legal or other professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article - including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
As contactless payment technology becomes more widespread, so do payment surcharges. In 2022, the Retail Payment System Act passed with the goal of reducing costs for businesses that accept card payments so that there would be a decrease in surcharges for customers. However, there are growing concerns that certain retailers are now profiting from surcharges at the expense of consumers.
The Act allows the Commerce Commission to establish merchant surcharging standards to ensure that retail payment service surcharges align with the actual cost to merchants for accepting payments. These standards may include requirements for disclosing surcharge information, representing surcharges as specified, limiting surcharges according to the standards, and maintaining records of surcharge calculations.
While no merchant surcharging standards have been introduced since the Act was passed in May 2022, merchants are advised to proactively ensure transparent and cost-aligned surcharges based on the Commission's guidance. The Commission reserves the right to introduce standards if it deems surcharging practices inappropriate, potentially resulting in maximum penalties of up to NZ$200,000 for individuals and NZ$600,000 in the case of an organisation breaching such standards.
The Commerce Commission has released a guide for merchants to appropriately surcharge to mitigate concerns. The key points are:
- Ensure transparency regarding the surcharge, such as displaying a sign near the register, and inform customers of their payment options before they pay.
- Offer customers at least one alternative payment method that does not involve a surcharge.
- Set surcharges at a level that does not surpass the extra cost associated with accepting the specific retail payment, often aligned with the merchant service fee for those payments.
Any proposed standards would undergo consultation before becoming enforceable.
Although nothing is in force yet, it is clear that the Commerce Commission is growing ever more concerned about current surcharging practices. In light of this, merchants can expect some form of standards to be imposed in the near future. For any questions or concerns, whether you are a merchant, payment provider, or consumer, our Consumer Markets team can provide expert guidance and assistance.
DisclaimerThe information in these articles is general information only, is provided free of charge and does not constitute legal or other professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article - including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
