Card Payment Surcharges To Be Banned

The Consumer Council has welcomed a decision by HM Treasury to ban credit and debit card surcharges.

UK customers can be charged up to an extra 20% on credit and debit card purchases, with businesses ranging from takeaway apps to global airlines charging people to make card payments or for other services such as Paypal. While many industries have acted to absorb the cost and not pass these on to consumers, the new rules being introduced from January 2018, will bring an end to the practice entirely.

The rules will also tackle surcharging by local councils and government agencies.

In 2010, the total value of surcharges for debit and credit cards was an estimated £473 million.

The Economic Secretary to the Treasury, Stephen Barclay, said: "Rip-off charges have no place in a modern Britain and that's why card charging in Britain is about to come to an end. This is about fairness and transparency, and so from next year there will be no more nasty surprises for people at the check-out just for using a card.

"These small charges can really add up and this change will mean shoppers across the country have that bit of extra cash to spend on the things that matter to them.

"This action forms part of our wider help for families with the cost of living by helping to raise their incomes and keep more of what they earn."

Welcoming the move, the Consumer Council said: "Surcharges are the costs consumers pay to make payments by credit or debit card. Currently, some companies like airlines, ticket websites and fast-food websites are charging fees of between 2.5% to 5%. Today's announcement will bring an end to this practice by making transactions more transparent."

Philippa McKeown-Brown, Head of Consumer Empowerment and Protection at The Consumer Council, concluded: "This ruling will ensure the cost consumers are asked to pay is clear and upfront, allowing them to shop around, and compare fairly on price, rather than finding an additional cost being added on at the end of the transaction".

"In addition, paying by credit card or debit card provides consumers with extra protection under consumer law. Paying by credit cards, even if it's only a small proportion on items costing between £100- £30,000 gives consumers additional protection if things go wrong, such as the goods are faulty, fail to arrive or are not as described. In these instances, under Section 75 of the Consumer Credit Act 1974, consumers can claim their money back from the credit card provider.

"With debit or credit card payments under £100, consumers are also protected through the Chargeback process. The Consumer Council's guide 'Safer Ways to Pay' which is available on our website, or via 0800 121 6022, provides consumers with further advice."

(MH/LM)