UK to Ban Businesses From Charging Credit Card Fees
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Consumers in the United Kingdom scored a big victory this week as the British government has announced that it will be barring companies from charging customers extra fees while using credit cards and other payment services.
The policy, announced by the UK’s finance ministry on Wednesday, says that as of January 2018, businesses will no longer be able to charge an extra fee at check out for using a debit or credit card. This applies to all merchants, including food delivery services, shops/stores and even government service providers.
According to The Telegraph, these fees sometimes are as high as 20%. As it stands currently, UK businesses essentially pass on the credit card transaction fees to consumers — and sometimes tack on an additional fee if a customer wants to pay with a card. American Express, Mastercard, PayPal and Visa cardholders will be protected from the fees once the new ban goes into effect early next year.
The finance ministry said that consumers were charged approximately £473 million ($617 million) in extra fees in 2010. Prime Minister Theresa May and the Tory government are expanding upon an EU rule passed in 2015 that capped interchange fees on cards. However, it wasn’t uniformly followed by businesses and governments.
According to The Guardian, UK citizens can pay taxes with a credit card but if they choose to do so, they’ll be charged between .374% and 2.406% in extra fees. Once the ban is implemented, they’ll be able to pay taxes with no additional surcharges. After the law goes into effect, groups that are caught charging fees will be forced to repay them and may face fines. Critics of the law say that businesses will simply raise prices to compensate for the loss of revenue that came from those fees.
This new rule is great news for UK citizens and visitors alike, since they’ll be able to avoid paying what can sometimes be a significant amount of money in fees — on top of the price of the goods or services. If you’re traveling abroad any time soon, remember that some credit cards do charge extra for making credit card purchases abroad, so you’ll want to familiarize yourself with this list of the top cards with no foreign transaction fees.
Featured image courtesy of Peter Byrne via Getty Images.
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