How consumer attitudes towards surcharging could impact New Zealand’s digital agenda

New Zealand has long been a global leader in digital payments, from early adoption of contactless “tap and go” payments to a growing eCommerce market that could reach over 10 billion U.S. dollars (approximately 16 billion NZ dollars) in revenue by 2027. Today New Zealanders continue to embrace payments innovation, which supports the nation’s broader digital agenda to drive economic productivity and growth for individuals, businesses and communities.  

While tapping a card, mobile phone or smart watch at the checkout has become one of New Zealand’s preferred payment methods, businesses can face challenges in navigating consumer preferences. An emerging issue is consumer attitudes towards businesses that apply  a surcharge when consumers choose to pay for their coffee, groceries, or other everyday items with a method other than cash, in particular card or mobile payments.  
 

Surcharging presents complex considerations for discussion as an industry. Regulation in New Zealand permits surcharging but reinforces that the surcharge should be no more than the cost of accepting a particular payment method. However, research commissioned by Visa and conducted by YouGov has shown that the vast majority of New Zealanders surveyed have a negative attitude toward this practice, as 92 per cent agreed that being charged an additional amount made them feel like they were being penalised for choosing  a certain payment method. Additionally, 87 per cent believe stores should absorb the cost of card processing and not pass it on to customers.  And perhaps most importantly for businesses, 86 per cent of consumers report that paying an additional amount can make them question the competitiveness or value of the product or service they’re paying for.  
 

Visa’s view is that surcharging - especially excessive surcharging - can have a negative impact on businesses as well as consumers. Businesses should consider several different factors when deciding whether to surcharge their customers for accepting card payments:  
 

• Compliance with regulatory guidelines around surcharging.  
• The experience of cardholders from New Zealand, as well as international visitors who may not be accustomed to paying more when they choose to pay by card.  
• The administrative, handling, and other internal costs incurred from accepting cash and other manual payments. 
• The ability to attract consumers who prefer to pay with their card or for those who aren’t carrying cash. 
• How the costs of processing digital payments could be absorbed alongside other everyday business operating costs, such as rent and electricity. 
• The speed and efficiency of card payments, which provide merchants guaranteed payment for properly authorised transactions, while also providing consumers with a fast and secure payment method.  
   

With the rapid acceleration of digital payments, Visa’s view is that there needs to be clarity around what constitutes excessive surcharging, and open discussion about the impacts on consumers and businesses. Payments is one component of New Zealand’s goal towards working and thriving in a digital world. To continue the progression of the digital agenda, Visa believes that defining the best way forward as we all adapt to the ever-changing world of commerce is crucial.  

For more information visit: Visa.co.nz