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Credit and debit card surcharges to be banned | Credit and debit card surcharges to be banned |
(about 9 hours later) | |
Consumers are no longer to be charged extra for paying by debit or credit card, the government has said. | Consumers are no longer to be charged extra for paying by debit or credit card, the government has said. |
From January next year, businesses will not be allowed to add any surcharges for card payments. | From January next year, businesses will not be allowed to add any surcharges for card payments. |
The worst offenders currently are airlines and food delivery apps, and small businesses which typically add a fee for cards. | The worst offenders currently are airlines and food delivery apps, and small businesses which typically add a fee for cards. |
In 2010 alone consumers spent £473m on such charges, according to estimates by the Treasury. | In 2010 alone consumers spent £473m on such charges, according to estimates by the Treasury. |
It follows a directive from the European Union, which bans surcharges on Visa and Mastercard payments. | It follows a directive from the European Union, which bans surcharges on Visa and Mastercard payments. |
However the government has gone further than the directive, by also banning charges on American Express and Paypal too. | However the government has gone further than the directive, by also banning charges on American Express and Paypal too. |
Campaigners welcomed the move, saying it was great news for consumers. | Campaigners welcomed the move, saying it was great news for consumers. |
Take-aways | Take-aways |
At the moment those booking airline tickets with credit cards pay an extra 3% with Flybe, with a minimum payment of £5. | At the moment those booking airline tickets with credit cards pay an extra 3% with Flybe, with a minimum payment of £5. |
Customers of Ryanair and Norwegian pay 2%. | Customers of Ryanair and Norwegian pay 2%. |
However Flybe has already promised to get rid of the minimum payment, and cut its charges. | However Flybe has already promised to get rid of the minimum payment, and cut its charges. |
Several airlines, including Monarch and British Airways, have reduced their charges in the last year. | Several airlines, including Monarch and British Airways, have reduced their charges in the last year. |
Take-away food apps are also amongst the highest-charging businesses, the Treasury said. | Take-away food apps are also amongst the highest-charging businesses, the Treasury said. |
Both Hungry House and Just Eat add 50p to the bill for paying by card, although in some cases the charge may be paid by the restaurant. | |
On a £10 bill, that amounts to 5%. | On a £10 bill, that amounts to 5%. |
Many local authorities also levy charges of around 2.5%. The DVLA will also have to change its card payment policy. | Many local authorities also levy charges of around 2.5%. The DVLA will also have to change its card payment policy. |
Price increases | Price increases |
The change in the law is likely to mean some companies will simply put up their prices, to cover the extra costs they bear with card payments. | The change in the law is likely to mean some companies will simply put up their prices, to cover the extra costs they bear with card payments. |
Banks typically charge large retailers between 10p and 20p for each debit card transaction, or 0.6% for credit cards. | Banks typically charge large retailers between 10p and 20p for each debit card transaction, or 0.6% for credit cards. |
"Maybe they will bump the price up," said James Daley, the managing director of Fairer Finance, which has been campaigning for the change. | "Maybe they will bump the price up," said James Daley, the managing director of Fairer Finance, which has been campaigning for the change. |
"That's fair game. You have to take customers' money somehow. And it's not reasonable to add that cost on at the end of the process. | "That's fair game. You have to take customers' money somehow. And it's not reasonable to add that cost on at the end of the process. |
Why not put it in the headline price?" | Why not put it in the headline price?" |
There is also a question as to how the ban will be policed. Under the Consumer Rights Regulations, businesses are only allowed to charge a sum that reflects their own costs in processing a transaction. | There is also a question as to how the ban will be policed. Under the Consumer Rights Regulations, businesses are only allowed to charge a sum that reflects their own costs in processing a transaction. |
But Mr Daley said many businesses are in breach of the regulations. | But Mr Daley said many businesses are in breach of the regulations. |
Some small shops charge a fee for the use of a card - but they are also have to pay more to the banks for processing such transactions. | Some small shops charge a fee for the use of a card - but they are also have to pay more to the banks for processing such transactions. |