From the 13 January 2018, the government are banning all credit and debit card fees. The current rule, which came into practice in 2013 states that companies can only charge what it costs them to process the credit or debit payment, this means they should not make a profit on these surcharges.
The new rules will apply to any UK company selling goods and services to UK consumers. This law is following an EU directive, therefore all EU countries will also be banned from charging these fees. However, this is a UK law so will continue to operate after Brexit.
There will be no surcharges on payments made by American Express and linked payment methods such as PayPal or Apple Pay.
How much will consumers save?
At the moment, consumers are charged a fee of around 2% depending on the value of the transaction. But they can also be charged a flat rate fee regardless of how much they are spending. Here are a few examples of surcharges found:
- Driver and Vehicle Licensing Agency (DVLA) – £2.50 credit card fee on all transactions.
- Flights – Flybe charges 3% on credit card and PayPal transactions.
- Package holidays – Thomas Cook has a 2% credit card fee.
These small fees really do add up. In 2016 credit and debit card fees were said to charge us an extortionate £473 million. This new law means shoppers all over the UK will save each year.
This article first appeared on our old website.