Industry News

New UK law means debit and credit card fees will become a thing of the past 

Debit and credit card transactions will no longer cost consumers an added fee under a new law put in place by the UK government.

Businesses, such as ticketing companies, will not be permitted to add any surcharges for card payments as of January 2018.

According to the BBC, airlines and food delivery apps are the two industries that have the worst track record for extra charges. Small businesses are also up there with the worst offenders as they typically add a fee for any card use.

In 2010 alone consumers spent £473m ($617m/€535m) on such charges, according to estimates by the Treasury.

The move to put an end to such fees follows a directive from the European Union, which bans surcharges on Visa and Mastercard payments. The UK has gone further and banned charges on American Express and Paypal too.

Ticketing giant Ticketmaster does not list a specific credit card fee, but does apply a ‘service charge’ on top of an ‘order processing fee’.

Airline company Flybe currently charges an extra three per cent for customers paying with credit cards, with a minimum payment of £5. Meanwhile, Ryanair travellers pay an added 2 per cent.

The ticketing industry is known to be a serious offender of upping charges on top of the face value of the ticket itself. It has become commonplace to see extra fees when buying theatre tickets, tickets to music events or tickets for seasonal leisure activities.

The Empire cinema chain reportedly has a 70p “card handling fee” for any tickets that are bought online or over the phone with a card. The Guardian reports that it said this per ticket charge was levied to cover costs.

Critics of the plan believe it will simply push some companies to hike their prices to cover the extra costs they bear through card payments.

Banks typically charge large retailers between 10p and 20p for each debit card transaction, or 0.6 per cent for credit cards.

“Maybe they will bump the price up,” said James Daley, the managing director of Fairer Finance, which has been campaigning for the change. “That’s fair game. You have to take customers’ money somehow. And it’s not reasonable to add that cost on at the end of the process. Why not put it in the headline price?”

Under the Consumer Rights Regulations, businesses are only allowed to charge a sum that reflects their own costs in processing a transaction. However, Daley said many businesses are in breach of the regulations and raises the question of how the ban will be policed.

Image: FrankieLeon