The Commerce Commission is calling on businesses to lower their surcharge rates for credit card transactions so they’re “cost reflective”.
Currently, businesses have to pay a credit card fee for each transaction they do so payment can safely reach their bank accounts. The fee often applies to contactless payments, like payWave and Apple Pay.
But as time has gone on, fees have gone up, which means merchants are under more pressure - which is why customers need to pay a surcharge to offset the loss in profit.
New laws have been introduced to lower the fee for transactions, but the Commerce Commission has noticed some businesses have kept surcharges at the same rate and are now asking merchants to “just charge what it costs them”.
“This shouldn’t be a profit centre,” says Commerce Commission chair John Small.
“These surcharges are quite irritating when they’re too high.”
Small says surcharges should never be more than 2%, calling that rate “quite excessive”.
He said they should only cover the cost of a transaction fee, saying surcharges should never be used as a “profit centre”.
“Everyone needs to be looking out… this should just be in line with costs.
“Perhaps if the merchant has a lot of international transactions, that's okay, but no, it’s not supposed to be a profit centre.”
He said that so far, there has been a “mixed” reaction to the Commission’s calls for corporates and councils.
“Some of them have responded well and come to the party and pulled their surcharges down and realised that they should do the right thing.
“But the key point here is that it's bigger than these just these large merchants we’ve been writing to.”
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