End of the ‘rip-off’: all charges for pay­ing by card to be banned

The Star (St. Lucia) - - BUSINESS -

All ex­tra charges added to pay­ments for goods and ser­vices made by card are to be out­lawed, end­ing a “rip-off” that costs Bri­tons hun­dreds of mil­lions of pounds a year, the gov­ern­ment has an­nounced.

Fees for pay­ing with plas­tic – most com­monly a credit card – are rou­tinely levied on ev­ery­thing from low-cost flights and tax bills to cin­ema tick­ets and take­away meals, but the Trea­sury an­nounced that th­ese would be con­signed to his­tory from Jan­uary 2018.

The gov­ern­ment said the move, which builds on an EU di­rec­tive, would mean “shop­pers across the coun­try have that bit of ex­tra cash to spend on the things that mat­ter to them”. How­ever, some com­men­ta­tors said they ex­pected that many com­pa­nies would sim­ply hike their prices to com­pen­sate for the loss of this money, or change the name of the fee.

The fees have been a moneyspinner for some gov­ern­ment de­part­ments and of­fi­cial bod­ies, and they will also be banned from im­pos­ing th­ese charges. The Driver and Ve­hi­cle Li­cens­ing Agency cur­rently adds a flat fee of £2.50 to ve­hi­cle tax pay­ments by credit card, and its own data has pre­vi­ously sug­gested that it col­lects more than £8.5m a year in th­ese charges.

Sim­i­larly, HM Rev­enue & Cus­toms charges a fee for pay­ing a tax bill by credit card, which ranges from 0.374% to 2.406%, de­pend­ing on whether it is a per­sonal or cor­po­rate card – but, like the DVLA, it will no longer be able to do this from 13 Jan­uary.

The prac­tice, known as sur­charg­ing, is com­mon prac­tice across the coun­try, said the Trea­sury, with many busi­nesses and or­gan­i­sa­tions charg­ing peo­ple to make card pay­ments, or for us­ing other ser­vices such as PayPal. Many in­dus­tries had al­ready acted to ab­sorb the cost and not pass th­ese on to con­sumers, but th­ese rules would bring an end to the prac­tice en­tirely, added a spokesman.

There do not ap­pear to be any re­cent of­fi­cial fig­ures for how much th­ese sur­charges are cost­ing con­sumers, but the gov­ern­ment has pre­vi­ously cal­cu­lated that credit and debit card sur­charges to­talled be­tween £316m and £630m in 2010. It sug­gested a “best es­ti­mate” of around £473m for that year.

Among the com­pa­nies that im­pose fees are the air­lines Ryanair and easy­Jet, which charge a credit card fee of 2% and 1% re­spec­tively.

The Em­pire cin­ema chain has a 70p “card han­dling fee” for tick­ets bought on­line or over the phone with a credit or debit card. It said this per ticket charge was levied to cover costs.

Hun­gry­house, a web­site and app that let peo­ple or­der take­away meals, said most restau­rants im­posed a card fee that was typ­i­cally 50p to 75p per trans­ac­tion.

A num­ber of lo­cal au­thor­i­ties also im­pose han­dling fees when peo­ple pay for ser­vices by credit card. At Ham­mer­smith and Ful­ham coun­cil in Lon­don the fee is 1.25%, while Rich­mond upon Thames charges 1.65%. Both coun­cils said they did not profit from th­ese fees.

The Trea­sury ac­knowl­edged that while this change was the re­sult of an EU di­rec­tive that re­lated to Visa and MasterCard sur­charges, the UK was “go­ing fur­ther” by also ban­ning charges for hold­ers of Amer­i­can Ex­press cards and users of ser­vices such as PayPal and Ap­ple Pay.

The con­sumer group Which? said the end­ing of sur­charg­ing was “long over­due”. It added: “Pre­vi­ous ac­tion to pro­tect con­sumers from ex­ces­sive card sur­charges has been dif­fi­cult to en­force, leav­ing con­sumers pay­ing over the odds just for pay­ing by card. Th­ese new rules will fi­nally put an end to this un­fair prac­tice.”

Guy Anker, man­ag­ing edi­tor of the MoneySaving­Ex­pert. com web­site, said scrap­ping th­ese charges was good news for mil­lions of con­sumers but warned: “We ex­pect some com­pa­nies will raise prices for all to com­pen­sate for the loss, which could hit those who cur­rently pay in cash or by debit card.”

Stephen Bar­clay, the 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. This is about fair­ness and trans­parency.”

Var­i­ous credit cards and bankcards from Bri­tish banks.

Newspapers in English

Newspapers from Saint Lucia

© PressReader. All rights reserved.