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Disclaimer: Educational purposes only. Not legal advice. Consult a qualified NZ legal practitioner for your specific circumstances.

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consumer

Surcharges: Can businesses charge extra for paywave/credit cards?

Key Takeaway

In New Zealand, businesses can generally charge surcharges for payment methods like Paywave or credit cards. However, these surcharges must be clearly and prominently disclosed to the consumer before they commit to the transaction. The Fair Trading Act 1986 prohibits misleading conduct and false representations about pricing, ensuring transparency for consumers regarding any additional payment fees.

Surcharges for Paywave/Credit Cards in New Zealand

Businesses in New Zealand may charge consumers an extra fee, known as a surcharge, for using certain payment methods like Paywave or credit cards. While generally permissible, these surcharges are subject to rules primarily under the Fair Trading Act 1986, which focuses on ensuring fair trading practices and preventing misleading conduct.

What is a Surcharge?

A surcharge is an additional charge added to the advertised price of a good or service when a customer chooses a specific payment method, such as a credit card, debit card, or contactless payment (e.g., Paywave). These charges are typically intended to cover the processing fees incurred by the business from financial institutions.

Legality of Surcharges

New Zealand law does not prohibit businesses from charging surcharges for electronic payments. The key legal requirement revolves around the clear and upfront disclosure of these charges to consumers. If a surcharge is applied, it must be communicated to the consumer before they commit to the purchase.

Fair Trading Act 1986 and Surcharges

The Fair Trading Act 1986 (FTA) prohibits misleading and deceptive conduct in trade. The relevant sections ensure that consumers are not misled about the price they will pay for goods or services.

Misleading and Deceptive Conduct

A business must not engage in conduct that is misleading or deceptive, or is likely to mislead or deceive [Source: Fair Trading Act 1986, s 9]. This means that if a surcharge is not clearly disclosed before the transaction is finalised, it could be considered misleading. For example, if a price is advertised, but a surcharge is only revealed at the point of payment, a consumer could argue they were misled about the total cost.

False or Misleading Representations Concerning Price

The FTA specifically prohibits making false or misleading representations concerning the price of goods or services [Source: Fair Trading Act 1986, s 13(g)]. If a business advertises one price for a product or service but then adds an undisclosed surcharge for a common payment method, it could be seen as making a false or misleading representation about the total price. For an advertised price to be accurate, any compulsory surcharges must be included or clearly stated as additional.

Unsubstantiated Representations

Businesses must have reasonable grounds for any representation made in trade [Source: Fair Trading Act 1986, s 12A]. While the FTA doesn't dictate the exact amount of a surcharge, if a business claims a surcharge is 'to cover costs' and the amount charged is significantly higher than actual processing costs, it could potentially be considered an unsubstantiated representation. However, proving this can be difficult for consumers, as the focus is primarily on disclosure.

Consumer Guarantees Act 1993 and Surcharges

The Consumer Guarantees Act 1993 (CGA) provides consumers with guarantees regarding the quality of goods and services supplied in trade [Source: Consumer Guarantees Act 1993, s 1A]. The CGA generally ensures that goods are of acceptable quality and fit for purpose, and that services are carried out with reasonable care and skill. It does not directly regulate payment surcharges. Its focus is on the quality and performance of goods and services themselves, rather than the methods of payment or any associated fees for processing those payments. Therefore, the CGA's applicability to surcharges is limited to ensuring the service of facilitating payment is provided with reasonable care and skill, but it does not dictate whether a surcharge can be charged or its amount.

Key Considerations for Consumers

Consumers should always check for any stated surcharges before agreeing to a purchase. Businesses typically display notices about surcharges near the point of sale, on menus, or on their websites. If a surcharge is not disclosed upfront and only appears when paying, consumers have the right to question it and can lodge a complaint with the Commerce Commission if they believe the conduct is misleading.

Key Considerations for Businesses

Businesses that impose surcharges for certain payment methods are obligated to ensure these charges are clearly and prominently displayed to consumers before the consumer commits to the transaction. This means making the information available at the beginning of the purchasing process, not just at the checkout counter. Transparency is crucial to comply with the Fair Trading Act 1986.

When to Seek Independent Legal Advice

For specific interpretations of the law in relation to a particular situation, or for assistance with lodging a complaint, it is recommended that individuals contact official regulatory bodies or seek independent legal advice. The Commerce Commission handles complaints under the Fair Trading Act. Free legal advice may also be available through Community Law Centres across New Zealand.

Key Resources