The Government has announced it will ban retail surcharges, which are costing New Zealanders up to $150 million a year.

However, it will still cost merchants, who will need to absorb the cost or pass it onto customers by hiking prices.

Commerce and Consumer Affairs Minister Scott Simpson said the move would put money back in people’s pockets by scrapping the frustrating fees often added at the checkout.

“Surcharges are a hassle and an unwelcome surprise when shoppers get to the till. That pesky note or sticker on the payment machine will become a thing of the past,” Simpson said.

“We’re banning surcharges so consumers can shop with confidence knowing how much they will pay for their purchases.”

The new law will come into effect by May 2026 and apply to in-store payments made using domestic Mastercard, Visa debit and credit cards, and EFTPOS.

The Commerce Commission estimates New Zealanders pay up to $150 million in surcharges every year, including between $45 million and $65 million in excessive charges.

“Shoppers will no longer be penalised for their choice of payment method, whether that’s tapping, swiping or using their phone’s digital wallet,” Simpson said.

The announcement follows a Commerce Commission decision to reduce interchange fees paid by businesses to accept Visa and Mastercard payments, which is expected to save businesses around $90 million a year.

Simpson said while surcharges are intended to cover the cost of accepting cards, many retailers overcharge or fail to clearly display the fee.

“In some cases, the retailer doesn’t even make it clear what the percentage is,” he said. “A ban on surcharges means no more surprises for people who currently feel like they’re being charged to use their own hard-earned money.”

The Retail Payment System (Ban on Surcharges) Amendment Bill is expected to be introduced to Parliament before the end of the year.