Hospo NZ warns surcharge ban may shift costs

Hospitality NZ says it supports the Government’s proposal to ban surcharges on card payments but cautions the move could result in increased costs being absorbed into general pricing for many hospitality businesses.

The Government has announced that the Retail Payment System (Ban on Surcharges) Amendment Bill will be introduced by the end of 2025, with the ban expected to come into force by May 2026. It will apply to most in-store transactions using domestic Visa, Mastercard and EFTPOS.

Steve Armitage, Hospitality NZ’s Chief Executive, says they appreciate the intent behind the change. “Simplifying the checkout experience for consumers is a positive step. But at the same time, it’s important to recognise that electronic payments come with real costs to businesses. If surcharges are removed, many operators will have to adjust their pricing to reflect that – particularly for small hospitality operators already under pressure.”

The Government estimates the move could save consumers up to $150 million a year, including $65 million in excessive surcharges.

However, Hospitality NZ notes that these savings will depend on how businesses respond and whether cost recovery mechanisms remain viable.

“Margins across the hospitality sector remain very tight,” points out Armitage. “Some operators may be able to absorb the cost, but for many, particularly smaller businesses, that won’t be realistic. These businesses may have no option but to reflect those costs in their pricing.”

Hospitality NZ has welcomed the Commerce Commission’s recent action to reduce interchange fees – a major component of payment processing costs – and supports further efforts to ensure banks and payment providers pass those savings on to merchants.