Outlawed: The card fees that hike your bills
SHOPPERS and holidaymakers will escape “rip-off” stealth charges for paying with debit or credit cards after today.
The fees – typically two per cent but sometimes as high as 20 per cent – cost Britons an estimated £166million in 2015.
Although the move derives from a European Union law on card payments, Britain has gone further by including payment methods such as PayPal and Apple Pay. It will remain law after Brexit.
The ban also applies to credit transfers and direct debits plus online payments.
Treasury Minister John Glen said: “It’s completely unfair for someone to be hit by a hidden fee just before they are about to make a purchase, so by scrapping these rip-off charges we are helping to give power back to the consumer.
“This added transparency ensures buyers can make informed choices about how they spend their hard-earned money.”
Refused
The move will ban firms such as British Airways charging a 1 per cent fee of up to £20 on credit cards, and Ryanair charging 2 per cent. It will also apply to councils and government agencies like the DVLA, which levies a £2.50 fee, from charging.
However, some taxpayers will be hit. HM Revenue & Customs will no longer accept personal credit card payments, arguing that it cannot pass processing charges on to the general taxpayer.
Charges for some cash machines, and booking fees for theatre, concert and cinema tickets, not linked to the payment method, will not come under the new rules. Firms can still set minimum price thresholds for accepting card payments.
Consumer groups have welcomed the move but warned that retailers might raise prices to offset the change. For example, takeaway firm Just Eat has just replaced its 50p charge for card payments with a 50p “service charge” on all orders.
Gareth Shaw, from Which? Money, said: “This ban should finally stop consumers being penalised simply for using their card. However, people will be wary if it results in price increases, minimum spend limits or even cards being refused.
“The Government and regulator need to closely monitor the effectiveness of the ban... to ensure that it has the positive impact for consumers originally intended.”
Some small firms fear the move will add to their costs, and encourage more to accept cash payments only.
Federation of Small Businesses national chairman Mike Cherry said: “The proportion of small firms reporting a rise in operating costs is now at a five-year high.
“Removing their freedom to share the burden of card payment fees will give them yet another outgoing to worry about.”