Ban on 'rip off' extra charges on card payments set to come into force on January 13

But experts have warned that banning surcharges may lead businesses to hike prices
Surcharges to card payments will be banned from January 13
REUTERS
Ella Wills4 January 2018

A UK ban on extra "rip-off" charges added to card payments is set to come into force.

New rules preventing companies from charging up to 20 per cent on credit or debit card payments will come into effect on January 13.

This will apply to both in-store and online payments, and includes American Express and other payment methods including Apple Pay.

The rules also tackle surcharges by local councils and Government agencies, such as the DVLA.

Under current law, which was implemented in 2013, customers should only be charged what it costs companies to process a card payment.

Businesses should not make a profit on these charges.

The total value of surcharges for debit and credit cards was an estimated £473 million, according to Treasury figures.

These fees are commonly levied by businesses ranging from takeaway apps to global airlines on customers who pay by card or use other services such as PayPal.

When the rules were announced, Stephen Barclay, economic secretary to the Treasury, said: "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.

"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."

However, experts warned that banning surcharges may lead businesses to hike prices.

Andrew Hagger, a consumer finance expert at Moneycomms, told the Financial Times: “It’s a good move, although long overdue, but there is the downside as this revenue that companies have been used to getting will disappear, so what do they do? They will likely look to recoup it elsewhere.

“I don’t think they’ll take it lying down, so it could mean an increase in the cost of services. It’s a bit of a sting in the tail for the consumer."

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in

MORE ABOUT