As Brits, we’ve learnt to accept the fact that we may be changed a variety of fees when paying for items or services on card – usually credit card.
Whether you’re paying your annual tax bill, booking a flight or paying for a takeaway online the chances are you’ll be charged a fee for using your credit card.
Some companies will disguise these fees as a “handling charge”, others will be more upfront and call them credit card fees. Some charge a flat rate whilst others will charge a percentage of the purchase value.
For example, HM Revenue and Customs will charge a fee of between 0.37% and 2.41% for those looking to pay their tax using a credit card, with the amount you pay depending on whether you’re using a corporate or personal credit card.
However, as of 13th January 2018, companies will no longer be able to charge this fee. This practice known as surcharging will be axed.
Whilst many industries are already absorbing the cost and not passing on this charge to customers, a significant amount of companies will be forced to remove surcharging.
According to Government statistics, credit and debit card surcharges are costing us between £316 million and £630million a year. Some of the more significant contributors to this amount will be low-cost airlines such as Ryanair who charge a 2% credit card fee and easyJet who charge 1%.
Other large retailers charging card fees include Empire who charge a 70p “handling fee” for customer using a credit or debit card to buy cinema tickets over the phone or online. Ticketmaster have also been criticised for routinely applying a “service charge” for using a credit card on top of their processing fee.
Several local authorities and councils will also charge a credit card handling fee when a customer attempts to pay their council tax or rent online.
The popular consumer group Which? have described these changes as “long overdue”. It also described the practice of surcharging as unfair to consumers.
The current economic secretary to the Treasury, Stephen Barclay classified card fees as “rip off charges” and added that they have no place in a modern Britain.
Of course, businesses will need to take action to ensure that these fees are absorbed and their profits are not negatively impacted as a result of this change. There are several theories as to how companies will do this, however it is most likely that they’ll simply increase prices to account for the shortfall.
This comes as VISA have announced plans to offer UK businesses incentives to go cashless. They have recently launched a similar scheme in the US where customers would be unable to make cash payments and would instead use contactless point of sale terminals.
Have you ever been charged a fee for a product or service that you felt was unfair? Let us know in the comments below.