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By Suzanne Daly
Cloud Accounting and Systems Specialist
Posted on: 19 March 2018

Credit Card Fees Banned

There is good news for consumers, as a recent change has meant that companies are no longer permitted to charge individuals a fee for opting to make a purchase through a credit or debit card – however businesses will be still able to add booking and admin fees applicable to all forms of payment.

What are the new rules?

Under current 2013 rules, the cost charged to consumers should be no more than what it costs them to process a debit or credit card payment. However under the new payment regulations section based on the EU Directive, all surcharges for paying via debit or credit will be abolished. This includes payments linked to your card such as PayPal and Apple Pay. As this is a UK law, the new rules will still apply after Brexit.

Banning these fees will make a difference on certain purchases. For example customers will no longer need to pay the 1% credit card fee charged by British Airways, and the 2% charged by Ryanair.

Will companies stop accepting card payments?

Although many larger companies have confirmed they will carry on accepting card payments, some smaller retailers may start to decline credit cards due to them potentially struggling with the associated costs. However crucially, HMRC will now no longer accept personal credit card payments for the settling of tax bills – although they used to ask for a 0.5% fee. Instead individuals will have to use a business credit card - which many will not have. HMRC will however continue to accept debit cards along with direct debits and bank transfers.

Council Tax Payments

Many councils currently allow for payments to be made via credit card, however incorporated within it is a fee. However, from now on these fees should disappear. Therefore individuals should be able to pay for their council tax without being charged. However, some may stop taking credit cards altogether.

To check whether your council still accepts credit cards click here.

Who Does The Ban Apply To?

As the rules are based on an EU directive, the ban on card surcharges applies to any transaction when the bank(s) of the consumer and the retailer are based within the EU, Iceland, Liechtenstein or Norway. However the same rules for PayPal and Apple Pay may not be applicable in other countries like it is in the UK.

If a retailer’s bank is located outside of the above countries, a surcharge may apply. However, the cost cannot be any more than what it costs to process the transaction.

In practice the ban will apply to many companies, and it will also apply to councils and Government organisations such as HMRC and the DVLA.

Does the rule apply to business credit cards?

The new law only applies to consumers, so businesses making a purchase can still be charged fees. However, as mentioned before, this can only be the amount it costs to process the transaction.

The rules are based on how you pay not who you are, so charges may apply to a business credit card. However, business owners using personal credit cards cannot be charged.

How do I report a wrongly charged fee?

If wrongly charged a fee when choosing to pay by card, you can complain to the company charging the fee. Furthermore, if asked to pay a fee, you can refuse to pay it, and report it Trading Standards. As a result, a refund can be granted.

However, companies are still able to set a minimum card payment on transactions. 

For further information on the banning of credit card fees and how this may affect your business, please contact Suzanne Daly at suzanne.daly@myersclark.co.uk or 01923 224411. 

Suzanne Daly
Cloud Accounting and Systems Specialist

Suzanne has 25 years’ accounting experience and provides expert guidance to SMEs looking to move to the cloud and implement new software.

Suzanne trained as a Chartered Accountant 25 years ago and spent far too much time ticking bank