The end of credit card payment surcharges?
From 13 January 2018, it will become illegal for any business to charge a fee in addition to the advertised price of a transaction to consumers (widely known as surcharging). For example, a travel company charging more to use a credit card rather than a debit card or cash. This change is being brought about by the introduction of the EU Second Payment Services Directive (PSDII) which the UK government is required to implement into UK law in order to meet its legal obligations and avoid infraction proceedings.The reforms also include other changes to the way payments by debit and credit cards, direct debit, credit transfers, standing orders and other digital payments are transacted and is intended to promote competition in the financial services industry and provide more security for online transactions. Unfortunately, it looks like these changes may not signal an end to booking fees and other similar charges. The PSDII legislation does not stop businesses charging a separate booking fee but the fee can only be charged if it is applied across all available payment methods. It also remains possible to levy a surcharge for payments by other methods such as cash or cheque but the amount must reflect the actual cost of dealing with this type of payment.It has been widely reported in the press that many businesses including a leading online food delivery company has removed its credit card fee and introduced a new ‘service charge’ that applies to all payment methods. It will be interesting to see how the Government and Trading Standards will react if these new charges become commonplace.Commercial transactions are not covered by the ban, but are subject to a prohibition on charging fees, this means the fee charged cannot exceed the actual cost of accepting the specified payment method. Some businesses may decide to stop accepting credit card payments altogether. Indeed, HMRC already confirmed some time ago that personal credit cards can no longer be used to settle a tax bill from 13 January 2018.