Contactless payments: What’s the Real Cost of That Tap Fee?
A big shoutout to my brilliant friend, Johan, who helped me really see how expensive convenience can be…
New Zealanders have fully embraced contactless payments — about 70% use contactless as their preferred method for everyday purchases, up from 36% between 2019–2020. But convenience often comes with a hidden cost: retailers commonly add 2–2.5% surcharges to cover their processing fees.
The Math of It
Let’s make it simple:
You spend $100, tap your card, and pay $2 in surcharge.
Think of that $2 instead as interest on a $100 loan for a single month.
That’s 2% per month, which annualises to a whopping 24% per year.
You aren’t literally borrowing, but the cost is that high, and remember, if it's a credit card, you could also be paying additional interest on the balance.
Why This Matters
Scale matters: That 2% on a $100 purchase? It’s big money — multiply that over hundreds of purchases per year.
Systemic costs: In 2023 alone, 125 complaints were filed over excessive surcharges; Consumer NZ labelled it a “surcharging swindle”.
Economic burden: Too often, savings from reduced merchant fees aren’t passed on. Consumer NZ says “tens of millions” lost by Kiwis annually to surcharges.
Policy in motion: Regulators are pushing to simplify and cap surcharges around 0.7–1.0%, aiming to save consumers and small merchants ≈ NZ$260 million/year
What You Can Do
Insert your card and use PIN — avoids the surcharge completely.
Carry cash or use traditional EFTPOS, which is fee-free in NZ
Ask before you tap — if a $3 coffee has a 2.5% surcharge, that’s 7.5¢ — negligible on a big purchase but pennies lost on the small stuff add up fast.
TL;DR:
That 2% tap fee might seem small, but it’s equivalent to paying ~24% interest on a loan — for one month. Over time, those fees quietly chip away at your money. Swipe, PIN, and awareness are powerful steps toward financial wellbeing. 💛
