Telecom and hotel chains are the latest businesses to introduce controversial surcharges for customers paying by credit card.



Telecom customers will face a 1.5 per cent surcharge if they pay their bills using credit or debit cards from August.



Spokeswoman Lucy Jackson said the charge would cover the fees and other costs it incurred accepting card payments. By giving customers two months' notice of the surcharge, Telecom had given them time to explore the "many free options", which included paying bills by direct debit from a bank account or by internet or phone banking, she said.



Visa spokeswoman Judy Shaw said it believed such charges were unnecessary, although becoming more common. Mastercard country manager Albert Naffah said he did not want to single out Telecom for criticism, but it was "best practice" that surcharges were clearly disclosed before a purchasing decision was made by a consumer, rather than after they had signed up to a service.



All the major hotel chains had also introduced surcharges of between 1.5 per cent and 2.5 per cent for people paying by credit card over the past year, Naffah said.



They typically did not disclose the surcharges when they accepted bookings, instead only advertising them via a sign at check-in, by which time it was too late for customers to protest, he said.



Jeremy Smith, president of the Wellington branch of the Hospitality Association, acknowledged the issue of hotels not disclosing the charges at the time of booking was something the association "should probably look at". However, he said a big chunk of customers now paid for hotels in full in advance using online intermediaries, which charged a 10 to 25 per cent commission on bookings.



Businesses have been entitled to impose surcharges on credit and debit card payments since 2009. That flowed from the settlement of a competition law dispute between the Commerce Commission and card companies.



However, the competition watchdog launched an investigation into Air New Zealand's surcharges in February when it promised to scrutinise businesses that sought to do more than recover their costs, and profit from such charges.



Naffah said Mastercard was concerned card-based transactions were being singled out by businesses which were not imposing similar cost-recovery charges on other payment forms such as cash, eftpos and cheques.These also had costs associated with them, he said. "Some are hidden and difficult to measure, but they are certainly not zero."



"If Telecom or any other retailers were only able to accept cash or eftpos they would have to set up more physical shop fronts to collect those payments."



Naffah said Mastercard intended to discuss the surcharge with Telecom, although he did not hold high hopes for a u-turn.