The days of paying a hefty fee simply for paying by credit or debit card will soon be over, as the government has announced plans to ban card surcharges in the UK.
The new ban – which will take effect from 13 January 2018 – will mean retailers and traders are no longer allowed to charge you for using your credit or debit card when making a purchase. The same will apply to government services – such as local authorities and the DVLA.
The government is implementing a new set of rules on payments written in the EU, meaning that surcharges will be scrapped in all member states next year, too.
Find out more: Rip-off card charges – see the Which? campaigns against card fees
How much do card fees cost you?
Under the current system, many retailers charge consumers to pay with a credit or debit card, both in person and online. Usually, you’ll notice this fee as a 2% to 3% surcharge on your bill when you go to enter your card details.
Since April 2012, the government has outlawed retailers from charging fees that are ‘excessive’. But many consumers still face surcharges of up to 3% on some transactions – a substantial amount, especially on big purchases.
This has been difficult to police, as it falls under the remit of Trading Standards to enforce. If you’ve been charged an excessive fee, you may be able to challenge it – find out how.
Under the new ban, retailers will no longer be allowed to charge customers any fees for using a card to make payment. This will apply to transactions on any credit or debit card, including Visa, Mastercard and American Express.
The government is introducing this ban thanks to a new EU law, the Payment Services Directive II.
Victory for Which?
Which? has been urging the government to address excessive card fees since March 2011, when it submitted a super-complaint to the Office of Fair Trading (OFT).
The OFT’s subsequent investigation found card surcharges were often far higher than the cost to companies to process the card transactions – and the complaint by Which? was upheld.
In April 2012, the government implemented a ban on ‘excessive fees’, meaning retailers had to keep cards fees at a ‘reasonable’ level and below the cost to their business.
Research by Which? at the time estimated that a debit card payment would cost no more than 50p to process while a credit card payment would cost no more than 2% of the sale – yet while most companies scrapped debit card fees, many kept their credit card fees at up to 3%.
Find out more: Time to say goodbye to rip off surcharges
Which? continued to push individual companies to lower their fees – and today, welcomed the move to outlaw fees altogether.
Gareth Shaw, head of Which? Money Online, said: ‘This welcome news is long overdue. Which? has been campaigning for an end to unfair card surcharges for years now, and triggered the process of reform with our super complaint back in 2011.
‘Previous action to protect consumers from excessive card surcharges has been difficult to enforce, leaving consumers paying over the odds just for paying by card. These new rules will finally put an end to this unfair practice.’