In­debted UK to scrap credit card charges

Kuwait Times - - BUSINESS -

The Bri­tish gov­ern­ment yes­ter­day said it would ban com­pa­nies from charg­ing con­sumers for pay­ing by debit and credit cards, as the coun­try strug­gles to bring down its debt.

“This is about fair­ness and trans­parency, and so from next year, there will be no more nasty sur­prises for peo­ple at the check-out just for us­ing a card,” Eco­nomic Sec­re­tary to the Trea­sury, Stephen Bar­clay, said in a state­ment. Con­sumers mak­ing pur­chases in Britain are be­ing asked to pay up to 20 per­cent more on their bills, such as for flights, for us­ing a card rather than cash, the Trea­sury said. “With many feel­ing the squeeze in the cost of liv­ing, peo­ple shouldn’t be hit with un­ex­pected fees,” said Guy Anker, man­ag­ing ed­i­tor at con­sumer web­site, MoneySav­ingEx­pert.com.

But he cau­tioned that fol­low­ing the change, some com­pa­nies would likely raise prices of their goods and ser­vices “to com­pen­sate for the loss, which could hit those who cur­rently pay in cash”. Cur­rently, busi­nesses face charges from card com­pa­nies for non-cash trans­ac­tions. Ac­cord­ing to the Trea­sury, the to­tal value of sur­charges for debit and credit cards was an es­ti­mated £473 mil­lion in 2010. “This ac­tion forms part of our wider help for fam­i­lies with the cost of liv­ing by help­ing to raise their in­comes and keep more of what they earn,” the Trea­sury said. Britain’s econ­omy is slow­ing as high in­fla­tion and low wage growth cuts con­sumer spend­ing and raises house­hold debt.

The Bank of Eng­land last month noted that UK con­sumer credit for items such as cars jumped by 10.3 per­cent in the year to April, or much faster than growth in house­hold in­comes.

Mean­while in May, union um­brella group, the TUC, said in a re­port that un­se­cured, or non-mort­gage, debt per house­hold would reach a record high of £13,900 this year ($18,118, 15,708 eu­ros). Britain’s Con­ser­va­tive gov­ern­ment is mean­while strug­gling to bring down the na­tional deficit and debt, which bal­looned fol­low­ing the global fi­nan­cial cri­sis that sparked bank bailouts. —AFP

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