Credit & Debit Card Fees Banned

As of 13 Jan 2018, Companies will no longer be allowed to charge consumers for paying with plastic (credit/debit cards).

Good news right? Sort of.

The cost of using them hasn’t gone away. The Banks/Merchants (the providers of the cards and therefore the credit finance) still charge a percentage to the companies to provide the service; nothing has changed there.

creditIt is the middle man (the company who provides a service such as airlines, shops, etc…) that has be banned from passing on those charges to the consumer (you) in the current manner (usually a percentage of the price you are paying). It is estimated the costs charged to the consumer is £166 million per year.

Companies cannot now charge you for using a credit card, debit card, Paypal, Apple Pay, Direct Debits or credit transfers. This applies to ALL UK companies and also across the EU as this is an EU Directive. What out for those firm based outside the EU though.

To expect companies to absorb those costs (when the banks are not) is surely naive.

So why the ban in the first place?
Because many companies (airlines have typically been cited as the worst) have been charging 2-3% for using credit cards, which is making a healthy profit. The expectation at the very least was for companies to charge what they themselves were being charged (even 1% would not have been unreasonable).

So now what?
What has not been banned are ‘service charges’ or ‘booking fees’ such as those you find when booking theatre or festival tickets. The difference here is that they are flat fees rather than a sliding scale. You can expect to see a few of those appear.

creditYou can also expect to see subtle price rises, albeit very small ones. The reality is that not everyone pays with a credit card (the more expensive of credit/debit cards  to service) and therefore to offset those that do, a flat very small increase across the board will hardly be noticed. This type of practice is already in use with Supermarkets and most high streets shops. You don’t pay there for using a credit card, it is no doubt already accounted for within the price you pay.

Some will stop taking credit cards. The DVLA I believe is one such organisation taking this step.

Overall, the news has to be good. It will undoubtedly encourage the use of credit cards. This comes with a significant dose of financial protection against company failure and also fraud. Has to be good in the fight against the increasing level of digital fraud.


About the Author:

Terry Crosby is the founder and co-owner of Travel and Trek Limited. He started the Company in 2005 after an long military career, which ultimately gave him the skills to set up, run, manage and develop what is now a global adventure travel company. He has extensive experience in all of the countries the company travel to and is an ex Mountain Leader and Arctic Survival Instructor.