'Rip-off' credit card charges will be outlawed by the government by January

Lucy White
Cashless Payments Overtake The Use Of Notes And Coins
Many businesses justify the surcharge by way of the fees they incur for accepting card payments (Source: Getty)

Credit card surcharges are to be outlawed by the government, after new rules were unveiled today to ban the practice.

Consumers may currently be charged 20 per cent extra when paying for an item by credit card, which totted up to an estimated £473m in 2010.

Businesses ranging from takeaway apps to global airlines often charge people to make card payments, but the new rules will outlaw this by January.

Read more: Card fees for paying for London taxis removed for all passengers

“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,” said Stephen Barclay, economic secretary to the Treasury.

“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.”

Government agencies such as the DVLA and local councils are also guilty of card payment surcharges, but the government has said it will tackle these bodies too.

A Mastercard spokesperson noted that the surcharge ban has been coming for several years.

It was introduced by the European Union in 2016 as part of the second European Payment Services Directive, the contents of which must be implemented by 2018.

Many businesses justify the surcharge by way of the fees they incur for accepting card payments. Businesses face costs including merchant service charges, hire payments for the chip and Pin machine, authorisation fees, a minimum monthly service charge, setup fees, charge-back fees and a fee to register as compliant with the Payment Card Industry.

Yet the government said it has already capped these costs, and “will engage with retailers to assess if there is any more that can be done to help”.

Read more: EU-wide cap on credit and debit card fees could save businesses money – but customers miss out thanks to slashed rewards programmes

Gareth Shaw of consumer group Which? 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.”

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