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Card surcharge ban

Thursday 11 January 2018

A new law banning companies from charging fees for credit or debit card payments will come into play this weekend.

From 13 January, surcharges on all card transactions will be banned in line with the European Payment Services Directive (PSD2).

Under the current consumer rules, which came into force in 2013, companies should only charge what it costs them to process a debit or credit card payment, ostensibly to off-set charges paid to card companies. But consumers can still face hefty charges, with fees typically around two per cent.

The updated regulation will affect all UK companies selling to UK consumers and applies both in-store and online, with additional payment methods like American Express and e-money services such as PayPal or Apple Pay also affected by the new law.

Customer to business

Referring to all non-commercial cards, the ban applies to both Visa and MasterCard (among others), but omits corporate cards issued to employees for business expenditures, such as office equipment, supplies or services.

The ban also extends to payment services to which EU Regulation 260/2012 applies, including direct debit and credit transfers via the Single Euro Payments Area (SEPA), which is the cross-border payment-integration initiative that allows customers to make cashless euro payments to anyone located in one of the 28 member states of the European Union or the four member states of the European Free Trade Association.

Business to business

The new law will only apply to consumers, so surcharges to businesses are permitted, but must not exceed the fee incurred by the merchant. It is important to remember though that the rules are based on how you pay not who you are, so if you use a business credit card you can be charged, but if you're a business owner using your personal credit card then you cannot. 


Where fees have been charged in contravention of the regulations, the consumer is under no obligation to pay, and if the fee has already been paid, the cost is fully refundable.

In the instance where the surcharge has not been recovered and a resolution is unable to be reached between the customer and the merchant, consumers have the option to directly enforce their right of redress in civil proceeding before the courts, or refer the matter to Trading Standards, or the Department for Enterprise, Trade and Investments in Northern Ireland.

Where do we go from here?

Whilst the changes are a positive step forward for consumers, they are limiting for businesses, and whilst regulation has previously attempted to cap charges imposed by payment processors, the hidden costs will still need to be met. 

Any business is however within its rights to refuse a method of payment. An example of this is HMRC, who previously charged a modest 0.5% fee, but from the 13 February will no longer allow tax bills to be settled with a personal credit card.

For more information, the full guidance document is available here and the amendments to the regulation can be found here.

As part of your membership benefit package, you have access to free legal advice, so for further guidance contact the ARLA Legal Helpline, and don't forget to have your membership number ready when you call.