Shoppers will be forced to pay cash at hundreds of stores which are losing their outdated eftpos terminals from Wednesday.
Paymark, which processes three-quarters of all electronic retail transactions, is disconnecting old terminals. Retailers who have not got a new machine will be reduced to cash only transactions.
Paymark will start with 520 machines of the 4000 it says are outstanding.
Chief executive Simon Tong told Checkpoint on Tuesday the disconnection is a last-ditch effort to get retailers to upgrade technology.
The current terminals have been around since 2004 and are unable to function to the capacity now needed.
Mr Tong says there have been problems with new chip bank cards with the old terminals and they are also not compatible for using the internet and broadband to process transactions.
Some 110,000 terminals used by 70,000 merchants throughout the country have been upgraded.