The ‘convenience fee’ costing Auckland ratepayers $1.4 million a year
Thursday, 16 July 2026
Auckland ratepayers paid $1.4 million in 1.75% online card 'convenience fees' for the 2025/2026 year.
Financial providers pocket this money, not Auckland Council.
Aucklanders could avoid these fees by using alternative payment methods.
Analysis: The frustration hits many Auckland ratepayers every three months.
You log on to pay your rates, go through the entire process, and as you progress to payment, you're prompted to accept a 1.75% “convenience fee” if you pay with either your debit or credit card.
This additional fee will hit particularly hard amid the news Auckland Mayor Wayne Brown has signed off on a 7.9% increase in rates.
Even before that hike, this convenience fee cost Auckland ratepayers in excess of a million dollars in the last financial year.
Auckland Council general manager of financial services Rhonwen Heath says this money doesn’t go into the coffers of Auckland Council.
“The 1.75% fee for online credit or debit card payments is sent directly to (and retained by) the financial or payment service providers, and the fee appears as a separate transaction on the customer’s statement,” Heath says.
An Auckland ratepayer speaking to Stuff confirmed this to be the case, noting that while their rates were $757.50, they also had a convenience fee of $13.25 attached to the payment.
Multiplied over four separate payments, this individual will be paying $53 per annum in convenience fees alone.
The higher your rates, the more you pay in convenience fees.
You can measure this $53 expense as the equivalent of a takeout or perhaps a week’s worth of petrol, but this doesn’t quite capture the extent of the waste happening every time Aucklanders pay their rates.
For the year ended 30 June 2026, Aucklanders paid $1.4 million in these convenience fees.
If this money were at least going towards Auckland Council it could have served to fill 7,156 potholes (at $200 a pop) over the course of the last year, but that’s not what it’s being used for.
It’s instead being lost to a labyrinth of financial services payments which go toward facilitating online credit of debit card payments.
This convenience fee is similar to the charges we might see when paying for an item at the dairy.
New Zealand Banking Association chief executive Roger Beaumont tells me the fee is made up of several components, a large one being the interchange fee which is regulated by the Commerce Commission.
An interchange fee is a small transaction fee that a merchant's bank pays to the cardholder's bank every time a customer swipes a credit or debit card to cover the costs of processing and fraud risk.
The Commerce Commission has capped those interchange fees at 0.7% since December last year (which has contributed to banks rolling back their credit card reward schemes simply because they have less money coming in.)
The remaining 1.05% will be contributed by the following fees:
Scheme fees – paid to card schemes such as Visa and Mastercard.
Transaction or processing fees – associated with processing and routing the payment.
Acquirer margin – retained by Council’s payment provider to cover services such as transaction processing, fraud management, customer support and operational costs.
The business receiving the payment can also put a small margin on top (as would be the case for some dairies), but Auckland Council says it makes no additional revenue from these charges.
This means the three parties that benefit from this are the credit card providers (Visa and Mastercard), the bank that issues the card and then the service provider that processes and receives the payment on behalf of Auckland Council.
The card-issuing bank pockets the interchange fee associated with the transaction, while Visa and Mastercard apply their usual service charge of roughly 0.05% to 0.15%.
The majority of the remainder lands with the Council’s payment-processing provider Windcave (the so-called acquirer), which also partners with a local bank to process the payment.
Regardless of who benefits, this is $1.4 million sacrificed by Auckland ratepayers every year to cover nothing more than these so-called convenience fees. And that’s only one council.
This figure will be even larger if the analysis is stretched to councils across the country, as well as airlines, travel agents and other service providers that apply these online convenience fees.
But here’s the thing. We don’t have to lose those funds.
How to avoid convenience fees
Auckland Council’s Heath tells me that these fees only apply to Kiwis who choose to pay their rates via debit or credit card.
“As a council, we have elected to pass credit or debit card convenience fees onto individuals who choose to use these cards, rather than the convenience fees being an additional cost to all ratepayers,” she says.
Heath says there are a range of other ways Aucklanders can pay for their rates, including:
Internet banking
Direct debit
Telephone banking
Account2Account (bank transfer)
In-person at council libraries with Integrated Service Centres and NZ Post shops
In-person payments via a debit or credit card carry a lower convenience fee of 0.67%, but they also aren’t popular.
The numbers from Auckland Council show that ratepayers only spent around $5000 in convenience fees associated with in-person payment to the year ended 30 June 2026.
Security and logistical issues
These alternative payment options may provide a saving to the ratepayer, but there are also concessions involved in choosing them.
Online debit and credit card payments are widely regarded as the most secure way to effect payments.
Bank transfers and telephone banking both have vulnerabilities that can lead to your money ending up in the wrong place. This is why fraudsters will often ask you to transfer money to them, knowing full well that it will be near impossible for you to retrieve those funds.
There’s also additional fraud protection baked into your credit card, in that if there is any fraudulent activity reported, the bank will return the money to you.
Opting for these alternative payment methods is essentially a trade, whereby you forego added security features for the benefit of not paying convenience fees.
Could Auckland Council lower the convenience fee?
Major businesses with high trading volumes can negotiate lower rates with their banks and technology providers.
Heath notes that supermarkets, for instance, would likely have better rates simply because of the sheer number of transactions being made on a daily basis.
While Auckland Council does process all the city’s rates payments, the scale of its transactions will be dwarfed by what’s happening at either of the major supermarket chains.
Auckland Council could swallow the transaction costs (as is done by the supermarkets), but someone would need to pay for the $1.4 million hole – and it would likely be put back on ratepayers, even those who would have previously avoided the convenience fee with other payment methods.
The only other alternative might involve Auckland Council approaching other banks or payment-processing providers to see if they can get a better rate to reduce this cost, but it’s questionable if this would be worth the logistical effort.
As things stand, the convenience fee does create a perverse incentive for Kiwis to pay their rates in other ways.
If more New Zealanders do decide to process their rates payments via these alternative methods, it could, ironically, become more expensive for the Council to manage rates payments.
Retail researchers have found that accepting cash payments, for instance, costs a business double because of the costs associated with handling, storage and transit.
Which begs the question: who derives the most convenience from these fees? Those paying them or those charging them?
So what’s your view on convenience fees? Where else have you seen them? And what do you think should be done about them? Let us know in the comments below.