The government has introduced a new rule to stop businesses adding any surcharges to credit and debit card payments, with the regulation coming into force from January 2018
The rule follows the EU Payment Services Directive (PSDII), which bans surcharges on Visa and MasterCard payments. The UK is taking this rule one step further by also banning charges on American Express and Paypal.
The rules will also tackle surcharging by local councils and government agencies.
In 2010, the total value of surcharges was an estimated £473m, according to the Treasury.
Currently, airlines and food delivery apps are the worst offenders. The Driver and Vehicle Licensing Agency (DVLA) charges a £2.50 credit card fee on all transactions, airline Flybe charges 3% on credit card and PayPal transactions and JustEat adds 50p to the bill for paying by card.
From 1 April 2016, HMRC replaced its 1.5% surcharge on credit cards with a variety of rates.
The current rates are shown below:
Personal credit cards
| Type of card | Rate |
| VISA Personal Credit Card | 0.42% |
| MasterCard Personal Credit Card | 0.39% |
| MasterCard World Premium Credit Card | 0.37% |
| MasterCard Signia Premium Credit Card | 0.61% |
| MasterCard Elite Premium Credit Card | 0.61% |
Corporate credit cards
Type of card | Rate |
VISA Business Credit Card | 1.51% |
VISA Corporate Credit Card | 1.74% |
VISA Purchasing Credit Card | 1.76% |
MasterCard Business Credit Card | 1.97% |
MasterCard Corporate Credit Card | 2.25% |
MasterCard Purchasing Credit Card | 2.41% |
MasterCard Fleet Credit Card | 2.13% |
The new rules could result in companies increasing their prices to cover the extra costs of dealing with card payments.
The government has previously capped the costs that businesses face for processing card payments and plans to engage with retailers to assess if anymore can be done.
Stephen Barclay, 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, and so from next year there will be no more nasty surprises for people at the check-out just for using a card.
‘These small charges can really add up and this change will mean shoppers across the country have that bit of extra cash to spend on the things that matter to them.’
