Card payment charges to be banned from January

Surcharges for paying for goods and services by debit or credit card will be outlawed from next January, the UK Government confirmed today.

Ministers have acted to implement the revised EU Payment Services Directive, which will end the practice that allows providers ranging from takeaway food outlets to global airlines – and bodies such as HMRC – to charge people to make card payments or for other services such as Paypal. While most surcharges are around 2%, there have been cases of charging up to 20%. 

In 2010, the total value of surcharges for debit and credit cards was an estimated £473m. The Government has previously capped the costs that businesses face for processing card payments, and says it will engage with retailers to assess whether there is any more that can be done to help. Business representatives have predicted a rise in prices as retailers pass on the card companies' charges.

The new rules come into force on 13 January 2018. The directive also provides for a new regulatory regime for innovative FinTech firms which will enable people to access data from all of their bank accounts at the same time, helping them to budget more effectively, or avoid unwanted overdrafts by making automatic payments between bank accounts when funds are running low.