The UK government is set to introduce rules aimed at scrapping ‘rip-off’ card charges that costs Brits hundreds of millions of pounds per year.
Starting January 2018, surcharges for card payments – where people can be charged 20% extra for purchases like a flight just for paying with a credit card – will no longer be legal.
‘Surcharging’ is common practice across the UK and surcharges have been used by shops, restaurants and other service providers to churn out additional profit at the direct expense of customers who choose to pay by card.
The government rules will be applicable to consumers paying with Visa, MasterCard, PayPal and American Express cards.
In a statement, HM Treasury said: “While many industries have acted to absorb the cost and not pass these on to consumers, these rules will bring an end to the practice entirely. The rules will also tackle surcharging by local councils and government agencies.”
According to an estimate, the total value of surcharges for debit and credit cards stood at approximately £473m in 2010.
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The Economic Secretary to the Treasury, Stephen Barclay, 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.
“The government has previously capped the costs that businesses face for processing card payments, and will engage with retailers to assess if there is any more that can be done to help.”