Before the ban people paying for goods or services online were often made to pay an extra fee if they chose to pay by credit card. These surcharges were typically 2% but could be as high as 5% of the price and often were not made clear until the very last moment.
Firms made excessive charges despite a cut in the fees which credit card providers charged them and in defiance of a law passed in 2013 which stated a surcharge could only reflect the actual cost of accepting a credit card payment,
So from Saturday 13 January 2018 such charges are banned completely. And not only for credit cards - the ban extends to any plastic payment and to PayPal, ApplePay and other electronic payment systems.
Enforcement
The law is clear but unfortunately how it will be enforced is not. Enforcement is principally in the hands of the local Trading Standards office. But the Trading Standards Institute has told Radio 4's Money Box programme that it is unlikely to be a priority.
"With no extra funding, budgets cut by over 56% within a
decade and 250+ pieces of legislation to enforce and consider – it is unlikely
to be a priority for any local TS."
If a major firm is illegally surcharging people widely over the UK then the Competition & Markets Authority can also intervene.
Self-help
If you are charged extra for using a credit card or any other form of payment then you have the right to demand a refund yourself.
You could email the Chief Executive of the firm something like this
"When I bought XXXX from you on <date> you applied a surcharge of x% to the price because I paid by credit card.
I am writing to you for a refund of that surcharge under Regulation 10 of the Consumer Rights (Payment Surcharges) Regulations 2012.
Since 13 January 2018 such surcharges are illegal under Regulation 6A(1) of the Consumer Rights (Payment Surcharges) Regulations 2012, as amended by paragraph 12 of Schedule 8 to the Payment Services Regulations 2017.
I look forward to hearing from you. Should you not pay the refund within 14 days I shall pursue my case through the Alternative Dispute Resolution process or take action in the courts."
Report them
You should also report the matter to trading standards. The way to do that is through the Citizens Advice Consumer Service on 03454 04 05 06. If Trading Standards get enough complaints about a particular firm it may take action. If the trader is based outside the UK but in the EU or Iceland, Norway, or Liechtenstein then the case will be passed to the UK European Consumer Centre. You can call them direct on 01268 88 66 90.
What firms might do
Firms can work round the new law in several ways.
- Refuse all credit card payments - this is the line that HMRC has taken. From 13 January 2018 you cannot pay your tax by credit card. The new law will not prevent a firm from setting a lower or upper limit for accepting credit card payment.
- Impose one charge for any means of payment - even if you turn up with cash. As long as the charge is the same regardless of how you pay that is lawful.
- Put up prices generally to cover the extra cost.
The ban applies to any retail payments when both parties are located anywhere in the European Union or in Iceland, Norway, and Liechtenstein. So it would not normally apply if you bought tickets online directly from an American airline.
The ban applies to any charge made from 13 January. But a charge made after that date under a contract entered into before 18 July 2017 is allowed.
It does not apply to goods or services bought using a corporate credit card. But even then the surcharge cannot exceed the actual cost to the company of that means of paying.
Further information
This Government guidance is useful for detail.
The Regulations implementing this law were made as a result of the EU Payment Services Directive 2015/2366.
Paul Lewis
version 1.02
13 January 2018
