New Zealand's government plans to "ban pay-wave fees"—but the fine print shows they're actually just banning merchants from passing those fees on to customers, forcing small businesses to absorb the cost while banks keep charging.
The policy, reported by Stuff, would prohibit retailers from adding surcharges when customers pay by contactless card or mobile wallet. But it does nothing to stop banks from charging merchants the underlying transaction fees—typically 2.5% of every sale.
That means either merchants eat the cost—already struggling in an economy with rising commercial vacancy rates—or they raise prices across the board, effectively making everyone pay the surcharge whether they use contactless payment or not.
According to the Commerce Commission, New Zealand consumers pay $150 million annually in payment surcharges. Meanwhile, NZ banks posted $7 billion in profit last year. Deducting that $150 million in fees would represent just 2.1% of bank profits—not their revenue, their actual profit.
Mate, the maths here isn't complicated. The government's making small businesses absorb what amounts to a rounding error for offshore-owned banks.
One New Zealand Reddit user who sparked discussion of the policy put it bluntly: "Our elected officials need to take a look at the basic maths, and disregard who bought them dinner recently. 2.5% of revenue for hard working NZ businesses? Or 2% reduction in profits for our offshore owned banks."
The banks have argued they're merely passing on fees from card networks like Visa and Mastercard, but critics note that those same networks waived fees entirely during the COVID-19 pandemic, proving they can operate profitably at lower rates.
Australia implemented similar surcharge restrictions in 2017, leading to widespread price increases as merchants built the cost into their base prices. Consumer advocates later acknowledged the policy had simply made payment costs less transparent rather than reducing them.
The New Zealand government has defended the measure as protecting consumers from "confusing and unexpected fees" at checkout. But the Commerce and Consumer Affairs Minister has not addressed whether the government will regulate the underlying bank charges.
Small business groups have called for the government to follow the European Union model, which caps interchange fees at 0.2% for debit cards and 0.3% for credit cards—far below New Zealand's current rates.
The proposed ban is expected to take effect in mid-2026, giving merchants several months to decide whether to absorb the fees, raise prices, or push back harder on the banks and the government for a real solution.
