Are they fair and are they legal?
Retailers have never been prevented by law from surcharging credit card transactions. They were prevented from doing so by the Agreement they had with their banks on the instructions of Mastercard and Visa.
Surcharging credit card transactions by retailers and service providers has never been against the law. Retailers were prohibited from surcharging in the Agreement they had with their banks, at the instigation of Visa and MasterCard.
In October 2009 the Commerce Commission announced the settlement of its investigation into anti-competitive issues regarding the interchange fees (the fees banks charge each other). The Commerce Commission claimed in the High Court that the banks breached the Commerce Act by agreeing and implementing the Visa and Mastercard credit card rules in New Zealand, and that such rules substantially lessened competition between the banks by artificially inflating the cost to retailers for accepting credit cards. The agreements with the financial institutions follow settlements reached in August with Visa and MasterCard that paved the way for interchange fees in New Zealand to be set by competition. The institutions that have reached settlements with the Commission are: ANZ National, ASB, Westpac New Zealand Ltd, Bank of New Zealand, Kiwibank/New Zealand Post, TSB Bank, and The Warehouse Financial Services Limited. The Commerce Commission expects that as a result of the settlements, retailers will be charged less for accepting credit cards and thus consumers will benefit.
So the merchant service fee is inflated above actual costs incurred by the banks. So who is being ripped-off? The retailers/merchants naturally pass the cost of the merchant service fee back to the customer through their pricing. In a fair and open situation, they would pass the surcharge on to only those customers who pay using a credit card. But the rules of Visa and Mastercard expressly prohibit this. So retailers are forced to factor the merchant fee into their pricing across all customers. So those customers who don't pay with a credit card are paying an inflated price caused by those that do.
The Commerce Commission expects that as a result of the settlements, retailers will be charged less for accepting credit cards and thus consumers will benefit. Consumers will have to wait and see if retailers choose to pass those savings on via lower prices. If the fees incurred by retailers were factored into all prices as a cost of doing business, and if retailers can negotiate with the banks for lower fees, why do they need to start passing the fees on to the customer now?