Government bans “rip-off card charges”

The Treasury announced today, July 19, that the ban on surcharging will extend to all retail payment instruments.

Payment instruments are the systems used when non-cash payments are made, such as paying using debit or credit cards, credit transfers, direct debits or e-money.

The rules have been consulted as part of the EU Payment Services Directive (PSD2) which will also tackle surcharging by local councils and government agencies.

In 2010, the government found the total value of surcharges for debit and credit cards was an estimated £473m.

Stephen Barclay, 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, and so from next year there will be no more nasty surprises for people at the check-out just for using a card.”

Barclay said this action forms part of the government’s wider help for families with the cost of living by helping to raise their incomes and keep more of what they earn.

The Financial Conduct Authority has also been reviewing credit cards as part of its high-cost credit review, which is soon to be published.

The government said this ban will be easier to enforce than the current position where merchants pass on costs to the consumer without them having an easy way of knowing what those costs are.

However, the ban will not be extended to commercial payment instruments.

Andrew Johnson, money expert at the Money Advice Service, said: "This is a positive move by the government, increasing transparency for consumers who want to shop around and get the best deal.

"Consumers should know exactly what they have to pay upfront and not face being hit with additional surcharges at the last minute."