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Do you charge clients who pay by credit or debit card?

Thursday 16 November 2017

If so, you need to be aware that it will soon be illegal to do so under new regulations which will come into force shortly.

As of January 2018, it will be illegal to make a surcharge to your customers for credit or debit card payments. The changes come as part of EU Payment Services Directive II, which is written into UK law by the Payment Services Regulations 2017 which come into force on 13 January 2018. 

The government say that: 

"The Payment Services Directive II (PSD2) seeks to build on Payment Services Directive (PSD) by creating a level playing field between all categories of payment providers, in turn increasing the choice, efficiency, transparency and security of payments. It does this by addressing: limitations to the scope of PSD; potential security risks in the payment chain; and consumer protection risks. It also reflects technological and market developments, such as the emergence of new electronic and mobile payments."

A number of other additional consumer protections are provided for in PSDII. These include: a maximum processing time of 15 days for a full response to customers’complaints, an unconditional refund right for unauthorised transactions; increased security requirements for the authentication for electronic transactions.

The current situation

In April 2012, the government implemented a ban on ‘excessive fees’, meaning retailers had to keep cards fees at a ‘reasonable’ level and no more than the cost to them of taking the card payment.

Subsequently, an EU rule change, implemented in the UK by the Payment Card Interchange Fee Regulations 2015 on 9 December 2015 capped “interchange fees” to no more than 0.3 per cent for credit cards and 0.2 per cent for debit cards. An interchange fee is the fee charged to retailers by the card issuer each time a credit card or debit card transaction takes place.

As this results from an EU Directive, does it still apply to the UK considering the vote to leave the EU?

Until exit negotiations conclude, the UK remains a full member of the European Union and all the rights and obligations of EU membership remain in force. During this period the government will continue to negotiate, implement and apply EU legislation. The outcome of these negotiations will determine what arrangements apply in relation to EU legislation in future once the UK has left the EU.