NZSCA responds to New Zealand ban of retail merchant fees – BeanScene

The New Zealand Specialty Coffee Association (NZSCA) has released a statement regarding the New Zealand Government’s recent policy announcement that would ban retailers from directly passing card merchant fees onto consumers.

New Zealand’s announcement of a proposed merchant fee ban is expected to be introduced by the end of 2025 and be fully implemented by May 2026. It has followed similar policy in Australia, which was announced in early July.

The NZSCA says while the policy is well-intentioned, it will likely have a negative impact on the nation’s small businesses and retailers.

“While this policy is intended to deliver savings to consumers, it is likely to further burden already struggling café and hospitality businesses and may not result in meaningful cost savings for the public,” the statement reads.

“Removing the ability to recover merchant service fees at the point of sale imposes a new cost on businesses. These costs will inevitably need to be recovered through higher retail prices, meaning customers may not see the savings this policy intends.

“The challenge is not the removal of the fees themselves, but the removal of retailers’ ability to directly and reasonably charge for these unavoidable costs, which further undermines the ability of small café businesses to operate profitably.”

The government’s decision to ban merchant fees follows its introduction of tighter regulation of interchange fees, yet the NZSCA says the two policies will not fully offset each other and retailers will be left feeling the pinch.

“While the government has introduced tighter regulation of interchange fees, reportedly reducing average costs for retailers by up to 35 per cent, this is only a partial offset,” the statement continues.

“For example, a café that previously incurred $10,000 annually in merchant fees and passed those directly to customers will now face a net cost of approximately $6500 per year, with no mechanism to recover that amount at the point of sale.

“The NZSCA calls on the government to engage further with the industry and consider comprehensive reforms that not only cap excessive merchant fees but also support hospitality businesses in recovering reasonable costs.”

Surcharges are already banned in the United Kingdom and European Union.