Ban on card surcharges comes into force

Published by Adam Williams on 13 January 2018.
Last updated on 13 January 2018

Ban on card surcharges comes into force

Companies are no longer allowed to charge a fee to customers choosing to pay with credit or debit cards.

From today, Saturday 13 January, card surcharges will be banned across the UK both online and in stores, with companies unable to charge individuals more for paying by credit or debit card than other forms of payment.

In practice, this means you cannot be charged more for paying by card instead of cash in a local shop, or for choosing to pay online with a credit card instead of a debit card.

Previously, retailers had been able to pass on the cost of processing card payments directly to customers in the form of processing fees, but the government has moved to outlaw this practice as it believes it is unfair to consumers.

Companies will still able to add a surcharge if you choose to pay by cash or cheque.

However, there are concerns the ban will mean companies increase prices for all customers, rather than only those who pay by card.

Takeaway ordering service Just Eat has already announced it will remove its 50p charge for paying with card and instead replace it with a 50p service charge for all purchases, regardless of form of payment. This is allowed under the new rules.

There are also fears that some organisations will stop accepting certain card payments altogether or to implement minimum spends for customers paying by card.

One organisation to implement such a change is HM Revenue and Customs (HMRC), which will no longer accept payments by credit card as of today.

The Federation of Small Businesses warns that smaller companies will be hit with increased costs because of the move and has urged the government to lower the amount banks are able to charge small businesses for processing card payments.

These changes have come into force as part of the second European-wide Payment Services Directive (PSD2), which also includes the launch of “open banking”. This is aimed at increasing competition in the banking sector and providing more protection for consumers.

*LINK TO OPEN BANKING STORY

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A pointless piece of

A pointless piece of legislation. Businesses get charged by credit card companies, so why should they not be allowed to pass on this cost. And anyway the business will simply pass on the cost in another form. The root problem is the sheer greed of credit card companies, and that’s where the controls should be enforced.