Surcharge parked following ‘please explain’ by ComCom
Gold-plated parking surcharges in Wellington, described by one councillor as “price-gouging”, have seen motorists forking out thousands in over-the-top extras for years.
Until April, motorists had been pinged an extra 50c on top of the cost of a parking space, meaning that someone paying a minimum $1 would be up for a 50% surcharge. Normal PayWave fees typically range from 1% to 2.5%.
The Wellington City Council dropped the fee to 30c on April 2. The PayMyPark app transaction fee for casual use also reduced from 50c to 30c, although app account holders still have to pay a percentage-based transaction fee to top up.
The surcharge covers the transaction and merchant fees the council is charged by its merchant service providers when a customer uses a card. It pays for merchant service fees, payment service provider fees, supplier payment facilitation fees and GST.
Councillor Diane Calvert said excess merchant fees had been an issue for years. While the council operated “a monopoly for on-street paid parking”, it was “not an excuse to price gouge”.
“Having affordable parking available in the central city is critical for both the city's vitality and prosperity. Increasing fees and cutting back ease of parking with no viable alternative is one of the many things the mayor, majority of councillors and Pouiwi representatives are turning a blind eye to.”
Moves to reduce the standard 50c fee followed a “please explain” from the Commerce Commission in March 2023, and a review by the council of its parking surcharge as part of a planned move to a new pay-by-plate parking system and new payment service provider from January 2024.
The commission had requested that a number of merchants review their surcharging practices to bring them into line “with our expectations” that surcharges should be “no more than the cost to [the merchant] of accepting the particular payment method”.
Others who were sent letters included the Hutt, Auckland, New Plymouth and Dunedin councils, Air New Zealand and Ticketek. They either had sufficiently high transaction volumes, meaning they should have had lower-than-average merchant service fees, or were believed to have surcharges greater than what was otherwise expected.
Questions to the Wellington City Council about the fee were treated as a Local Government Official Information and Meetings Act request.
In a memo dated October 2023, it was noted that there had previously been media interest in the surcharge, and that this, plus the Commerce Commission’s scrutiny, meant it was timely that a review of the merchant surcharge networks was carried out. It said reducing the fee to 30c would bring in revenue of $84,453.20, but would leave the council $1129.72 out of pocket, while Parking Services’ 2023-24 budget would be down $56,0000 per month.
However that “may be partially offset by other reductions in fees charged to council by the change in merchant providers”.
The documents also show that there was some discussion about whether the new parking machines accepted different forms of payment, other than contactless cards, given the commission’s advice that businesses should provide customers with at least one alternative payment method that does not incur a surcharge.
Some 260 of the new meters accept PayWave only, while 140 also accept cash.
Council spokesperson Richard MacLean said the 50c transaction fee had been in place for many years, in line with the fee’s framework at the time.
“The commission’s guidelines on appropriate surcharging issued in May 2023 provided clarity on what costs were appropriate to recover from users via a surcharge.”
The council had updated its software and reduced the surcharge as quickly as possible following the introduction of the new pay-by-plate technology and review of the surcharge. It would now regularly review the surcharge, which was set based on user data, to ensure that it recouped costs fairly without making an undue profit.