The Credit Card Surcharges
From 13 January 2018, Credit Card Surcharges on all transactions has been banned in line with the European Payment Services Directive (PSD2). Consumers are no longer to be charged additional for paying by credit card the government has said.
Under the current consumer rules, businesses will not be allowed to add any hidden charges for a debit/credit card payments, helping millions of consumers to avoid rip-off fees when spending their hard earned money. The companies should only charge what it costs them to process a credit card payment, apparently to offset charges paid to card companies.
The travelers may face big charges, with fees in general around 2% and on some smaller transactions accounting for as much as 20% of the bill to the cost of goods or services.
The revised EU Payment Services Directive 2 will ban Credit Card Surcharges on all payment cards covered by the EU Interchange Fee Regulation (IFR). This will ban surcharges on Visa and Mastercard credit card payments. Though, some cards not covered by EU rules will still be able to impose surcharges. These are understood to include Diners Club and American Express cards. If a merchant imposes surcharges on those cards, the surcharge must not exceed the direct costs borne by the merchant to accept the card.
However the government has gone further than the directive, by banning charges on American Express and e-money services such as PayPal or Apple Pay too.
The worst offenders were airlines, ticket sellers, foods delivery apps and small businesses which typically add a fee for cards. Banning Credit Card Surcharges made a real difference on some purchases. For example, British Airways currently charges a 1% fee of up to £20 on credit cards, Ryanair charges 2% on credit cards and the DVLA which charged a flat fee of £2.50 on credit cards has changed their card payment policy, from 13th January, 2018, these charges won’t be applied.
Take away food apps are also amongst the highest-charging businesses. Both Hungryhouse and Just Eat add 50p to the bill for paying by card, although in some cases the charge may be paid by the restaurant. Some vendors can charge a fee for the use of a card, but they are also to pay more to the banks for processing such transactions.
Though the change is good news for the consumers, who will no longer have to pay fees just because they’re paying on credit card. Yet there are few uncertainties that some companies will raise prices or introduce new service charges. The businesses seek to regain the related costs they must earn that includes processing usage and covering fraudulent transactions. This will inconvenience the best part of those who now prefer to quite pay for goods and services by cash or with a debit or credit card.
Some companies may charge new service fees to all customers no matter which method of payment you use. Takeaway service like Just Eat, which used to charge 50p for debit or credit card payments and has now scrapped that but introduced a new 50p service charge, which applies whether you pay by cash or card.
There are quite possibility that smaller retailers and other firms will stop accepting credit cards, because they struggle to absorb the costs associated with card payments.
This law only applies the businesses that can still be charged fees. The surcharge rules are based on how you pay not who you are, though. So if you pay with a business credit card you can be charged extra, but if you’re a business owner using your personal credit card, you can’t be charged the surcharge.
If a company tries to charge you a fee simply because you are choosing to pay by credit card, you can refuse and complain to the company saying this is not allowed and ask it to refund the charge. The cost is fully refundable, if the fee is already paid. You can also report it to Trading Standards if you are wrongly charged a fee. The new rules were enforced by Trading Standards who will have the power to take civil enforcement action against traders who breach the regulations.