Change is on the cards
From tomorrow, companies will not be allowed to charge a fee for plastic transactions
Financial worries or just looking for better value for money? Consumer champion Fergus Muirhead can help
QI AM considering getting a new American Express credit card at a cost of £295 per annum and have been advised by the company that it is about to become illegal for companies to charge a premium on purchases made using a credit card.
I haven’t heard or seen any info on this so I wonder if it is correct? George Campbell
AThe short answer to this question is yes, it is correct. But before we look at the implications of this new ruling, let’s take a look at the current situation. Under existing rules, which have been in force since 2013, companies have been allowed to charge a fee when customers used a credit or debit card. That fee was supposed to represent the amount of money that it cost them to process the transaction. It’s clear that this wasn’t always the case, and typical fees could have been around two per cent of the money spent. In some cases, customers were charged a flat fee for every purchase made, and this could end up as a huge percentage of the price for smaller transactions. And for large purchases, such as holidays, the transaction fee could run into hundreds of pounds.
So, from tomorrow it will be illegal for companies to add a credit or debit card processing fee for any transactions.
These charges have been hated for decades and consumer groups have long been pressing for action to be taken to remove them.
The ban will apply to all UK companies doing business with UK customers, although the ban will also apply in Europe since it has come about as part of an EU directive.
The ruling will apply to all credit and debit cards, including American Express, and will also mean that you won’t be charged extra if you use Apple Pay or PayPal to pay for goods or services.
Booking fees won’t be covered by this legislation, since these fees are added on to every ticket sold and are supposed to cover the administration involved in the sale of the ticket, rather than a cost for using a particular method of payment, such as a debit or credit card.
Retailers are arguing that they will now be out of pocket since in many cases they are only adding on charges that they have to forward to the credit card companies themselves.
It’s important to note that in some cases all of the extra fees that are