Credit And Debit Card Charges Will be BANNED From Saturday
- New rules come into effect on the 13th January, this Saturday
- You cannot be charged online or in stores for card payments
- How much can you save?
- What to do if you’re still being charged
From this Saturday, 13th January, shops won’t be allowed to charge you for choosing to pay by card.
The new law will mean that companies won’t be allowed to add on any surcharges for non-cash payments, including American Express, PayPal, or Apple Pay.
There should be no more, "50p extra for card".
The rules are part of a new EU Payment Services Directive, which means that the rules will be put into UK law and be applicable to all EU countries.
In 2013, companies were allowed to use the surcharge, but only to cover the cost of processing a debit or credit card payment.
Companies were not meant to use the ability to surcharge for card payments as a way to make profit, however consumers faced hefty charges.
The unpopular surcharge is estimated to cost consumers £500 million a year.
It has been widely used on higher cost purchases, such as by airlines, travel companies, and wedding bookings.
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, so there will be no nasty surprises for people at the check-out for just 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.”
The government is hoping that this will encourage spending, after shops suffered from poor sales over Christmas.
Is this good news for you?
Cutting out a surcharge on your purchases sounds like it will save you money, but this is not necessarily the case.
Companies have already been caught out nudging prices up or adding on an extra ‘service charge’ as a replacement for the card surcharge.
Unlike the card surcharge, this will apply to all customers instead, so you could lose out if you normally pay by cash.
One company caught doing this is Just Eat.
A Reddit user spotted Just Eat had replaced its’ Card Fee with a Service Charge, that is applicable even when paying by cash.
When questioned about this on Twitter, Just Eat responded by saying, “From January 8th, a 50p service charge has been implemented, whether payment is made by cash or card.
“This means that, along with our restaurant partners, we can continue to deliver the best possible takeaway experience, and applying the charge equally across the customer base ensures fairness for all.”
Another likely result from this is that smaller retailers may refuse card payments, or have a minimum spend limit for cards.
How much can you save?
If retailers don’t add hidden charges to make up for the surcharge cost, you could actually save quite a bit of money.
For example, card fees on council tax, which are up to 2.5%, will no longer be implemented, although due to changes being made for 2018, you’re council tax bill could be going up anyway.
Sky TV users will also save 30p per month on their recurring payments.
The biggest savings will be noticed on higher priced purchases.
Travel companies, like Flybee and Thomas Cook, currently have card payment surcharges of 3% and 2% respectfully.
With these charges gone, consumers will be able to save on transactions costing hundreds of pounds.
A survey of shoppers by payments provider Paymentsense, found that surcharges were a big turn-off, with 37% saying they would walk out of a store if faced with a charge.
Guy Moreve, Head of Marketing at Paymentsense, said, “The change cannot come soon enough.
“When consumers know they will not have to pay a card surcharge, there will be less hesitation to spend.”
What if you’re still being charged?
If you are still facing a surcharge that is explicitly for paying with a card, you do not have to pay this.
However, it is expected that some companies will disguise the current surcharge by raising prices slightly, or by calling it a different name, like Just Eat has done, and you’ll have to pay these.
However, you can avoid the charge from Just Eat by calling the restaurant directly to order, instead of using the website.
Have you noticed other companies upping their prices or adding extra charges? Let us know in the comments!