/ Money

The death of the rip-off card surcharge

Paying on card

Thank you to over 40,000 of our supporters who backed our campaign to end rip-off card charges. These sneaky fees for using credit and debit cards finally get the chop. Have you been stung by a card surcharge when making a payment?

A long-standing Which? campaign had a big win today as rip-off credit and debit card surcharges have been banned once and for all by the government.

Today’s announcement from the Treasury is an extension of the revised EU Payment Services Directive (PSD II). The ban will bring an end to retailers adding extra charges at the checkout for all card payments, including credit and debit cards as well as digital payment services like ApplePay and PayPal.

Sneaky card charges

Back in March 2011, we used our legal powers to submit a super-complaint to the Office of Fair Trading (OFT) to force an investigation into card surcharges. Our super-complaint came after we found that these charges were often far in excess of what it cost companies to process card transactions.

The OFT investigated the issue and upheld our complaint. It then began to look into what could be done to stop unfair debit and credit card surcharges. As a result, in December 2011, the government agreed to take action and confirmed it would ban excessive surcharges. This ban came in to force in April 2012.

But these rules meant that surcharges weren’t banned, but must reflect the cost incurred to the firm for processing the payment.

We estimated that it would be no more than 50p per transaction for debit card payments or 2% of the total transaction price for credit card payments. While it’s difficult to gather a full picture of how much card surcharges cost each and every business, it makes the justification to add charges of up to £10 for bigger transactions, such as for travel bookings, somewhat questionable.

And while some companies have dropped or reduced their charges over recent years, there are still many that haven’t. For example, an investigation by The Times last year revealed that Queen Mary University of London charged 2% on tuition fees in certain circumstances, Eurostar a £3 flat fee and Everyman Cinema 75p per ticket.

A real ban?

This new blanket ban on surcharges for all payment instruments will come into force in January 2018, but the question now is whether or not companies will absorb the cost and not pass them onto consumers in other ways.

Have you been charged unexpected fees for paying via credit or debit card? Do you think this ban will help you?


I don’t want to introduce felines among the avian friends, Lauren, but are those regulations solely UK government, as the header suggests, and are they entirely the result of Which? pressure? There’s a small sentence in the linked article: “The government is implementing a new set of rules on payments written in the EU, meaning that surcharges will be scrapped in all member states next year, too.” The Scotsmans also leads with this: “it should be pointed out that the measure is the result of an EU directive. And when Stephen Barclay, Economic Secretary to the Treasury, preaches “fairness and transparency” and promises “no more nasty surprises”, let it not escape anyone’s notice that HMRC, a public agency, levies a charge on those who pay their tax bill by credit card”. As, of course, does DVLA.


Hi Ian, we’ve done an awful lot of lobbying on an EU level with the Payments Services Directive (not just Which? staff members, but our supporters too who wrote letters to MEPs back in 2011). The Treasury’s announcement is regarding the implementation of these rules in January 2018, although the UK’s implementation does go a little bit further than PSDII. It was a Which? super-complaint that brought the issue to the table in the UK in 2011, but since then a number of other consumer advocates have joined in on this too.


That’s interesting, Lauren. When something like this is announced the politicians will be falling over themselves to claim credit. The detail you’ve given shows this is far from the case. Thanks.

Patrick Taylor says:
20 July 2017

These aspects of the EU being useful rarely enjoyed much publicity in the UK. It is a shame that the BUEC site [consumer groups in Europe] is not linked directly to Which? and a commentary made on EU decisions which affect UK citizens also.

Improved payments law: down with surcharges, up with safety

PRESS STATEMENT – 08.10.2015

With today’s vote in the European Parliament, the final hurdle to an upgraded EU payment services law that aims to make payment transactions safer and terminate card surcharges has been cleared.

The way people make payments is changing fast – increasingly payments are made via other providers than one’s bank (so-called third party providers).

Consumers will benefit in the following ways:

Surcharges for the use of debit and credit cards (for example when booking a flight or hotel) will be banned;
The consumer’s personal liability in case of fraudulent payments (for example with a stolen card) will be reduced from €150 to a maximum of €50. This amount can be further decreased if for instance the consumer did not act negligently;
Consumers are entitled to a direct refund from their bank in the case of an unauthorised transaction when using third party providers (for example Sofort or Trustly);
Security breaches or data losses must be communicated immediately to the users of payment services.

Monique Goyens, Director General of The European Consumer Organisation (BEUC), commented:

“Card fraud for euro payments amounts to €1.4 billion1. With new payment players entering the market, it is paramount that security is continuously being strengthened which is why, the upgrade of the EU’s payments law is a positive development.

“Having your bank card or bank details stolen is a very stressful experience. And being forced to pay hefty personal liability fees is just adding insult to injury for the victim. This law will substantially bring down consumers’ personal liability.

“In addition, surcharges for card payments are finally becoming history. They are often excessive and unjustified, and banning them in Europe is a great achievement for consumers.”

1 European Central Bank, https://www.ecb.europa.eu/pub/pdf/other/4th_card_fraud_report.en.pdf


Thanks for sharing, Patrick


Traders will not willingly take a drop in income, especially where they do face merchant charges from the card industry. Perhaps the cards will have to lower their expectations as well and reduce their handling costs and charges. For companies like travel operators who have done very nicely out of card charges it is almost certain they will spread the cost of not recouping them in future across all their customers. This will mean that those who up to now have settled without the use of a card will end up paying more because the fees will have to be incorporated in the headline prices without discrimination between cash- and card-paying customers. And if we all decide to pay by card in the future traders will incur even higher merchant charges which they will pass on to all customers. This is a win for consumers?


I welcome the end of these charges which can often be disproportionate and unfair. However, I am also concerned John that higher merchant charges will be passed on to customers who will then be worse off in the long run. A somewhat hollow victory.


I agree that this sounds like a rather hollow victory for consumers. A bit like “now you can borrow enough to get completely out of debt…”


Hi John, what this ban does is bring an end to the nasty surprises when you make a payment on card. That said, we share your concern here and that’s why we’re keen to keep an eye on how this is implemented.


If charges are passed on the customers from the outset regardless of how they ultimately pay, it is possible that if spread over all they could represent only an extra few pence/a quid/couple of quid per purchase. As charges currently seem to vary wildly from company to company and you only find out at the moment of paying, price comparison can be a real bother.


Thank you Lauren. I agree with you, and it also should eliminate the profit element inherent in the present situation and leave that money in customers’ hands. Whether, because they are treading on a false margin, any companies would go to the wall as a result remains to be seen, but I tend to take Sophie’s view that averaged out across all purchases it would be infinitessimal and most companies should be able to cover it through efficiency and productivity improvements.Nevertheless, there is a risk of price inflation and I glad that Which? is going to keep an eye on it.


I meant “trading”, not “treading”, in the third sentence.


If we want organisations to handle our transactions by providing credit, as those cards do, then a cost will be incurred. I use my card, pay it off in full monthly, and get up to 2 months free credit. How to pay for this service? Either make a direct transaction cost to the customer, use the interest others pay, or spread the cost over all purchasers. Either way we will pay.

I prefer a system where we pay for a service openly. My local computer supplier charges £2 to handle a cheque, 2.5% for a credit card, nothing extra for cash or a bank transfer/debit card. Seems sensible to me.

It’s all really a bit of smoke and mirrors – we pay in the end.