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UK prohibits credit card surcharges

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UK prohibits credit card surcharges
Post by Imaginos1892   » Wed Jul 19, 2017 11:11 am


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Joined: Sat Mar 24, 2012 3:24 pm
Location: San Diego, California, USA

The British Treasury Ministry has passed a rule that prohibits businesses from charging customers extra for buying with credit cards. According to the article, some greedy merchants were adding charges up to 20%, which I agree is excessive, but now they are not allowed to charge anything extra to cover the banks’ credit card fees.

It’s being hailed as a ‘victory for consumers’ but in reality, it’s a wet-dream for the banks. Most places that accept credit cards are already prevented by their contracts with the banks from passing those fees along, with the notable exception of gas stations, at least here in California. Cash or credit card, it’s the same price, which means that if you pay cash, you’re subsidizing those using credit cards.

The article also doesn’t provide any details about which businesses are adding the 20% surcharges. Could it be that they don’t want to deal with credit cards at all? Maybe it’s only on really small purchases, like under a pound? I know that here in the U.S. if somebody was adding 20% they’d go broke as most of their customers walked out.

This is a rule from the Treasury Ministry. Did anybody vote for it? Has there been any public debate? Or was it drawn up by a few bureaucrats in a back room? And then, purely by coincidence, they ‘leave government service’ and get high-paying jobs at…the same banks that benefit from the rule?

I don’t think this is any of the government’s damn business. If you don’t like the surcharge go somewhere else, or pay cash. Credit card transaction fees are an expense, and forcing the cash customers to pay that expense is unfair. Why, it’s Discrimination! Not everybody can get a credit card.
Ma Lemming: If all your friends jumped off a cliff into the sea would you…oh…um…nevermind.
Re: UK prohibits credit card surcharges
Post by munroburton   » Wed Jul 19, 2017 12:26 pm

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Link to the article you read?

Note that there is a difference between credit and debit cards. The latter is not a credit card; it deducts money which is already in your account.

Whilst not everyone can obtain a credit card, pretty much anyone can get a debit account. I know a few bankrupt people who are banned from credit cards but continue to use debit accounts(no overdrafts permitted).

One crucial thing you did not mention was the ability of the government to enforce this ruling. My understanding is that Trading Standards are responsible for enforcement and that they were already unable to prevent small businesses from levying surcharges which technically exceeded legal limits. It's been going on for years - hence the building push for this 'crackdown'. However, it is unlikely there will be additional resources allocated to Trading Standards - those are offices funded and run at the local government(council) level, currently experiencing budget cut after cut imposed by central government.

Anecdote time! A local taxi company rolled out those cashless payment machines two months or so ago - two hundred drivers. Well, a week ago, the company started asking the drivers to hand the cashless equipment back in because it wasn't being used enough. Customers simply preferred to pay cash or via a taxi company account rather than incur the extra surcharge.

A funny thing is, this originally began as an European Union directive implemented in 2015 which sought to impose a limit of 0.3% on credit and 0.2% on debit surcharges(previously the average was 0.8%). The UK government subsequently implemented that, failed to enforce them effectively and have now banned them completely.
Re: UK prohibits credit card surcharges
Post by Starsaber   » Wed Jul 19, 2017 12:40 pm

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Unfortunate. From the subject, I thought you were talking about credit card companies charging businesses when people used credit cards there (in addition to charging the card owner interest). I'm in the US, but there are businesses that have limits on what you can use credit cards for because of those fees from the card companies.
Re: UK prohibits credit card surcharges
Post by Daryl   » Wed Jul 19, 2017 6:18 pm


Posts: 2434
Joined: Sat Apr 24, 2010 1:57 am
Location: Queensland Australia

Years ago when traveling here I had the same dispute with airlines and hire car companies. "There is a $30 surcharge for paying with a card (credit or debit) sir". Me "Ok I'll pay cash then". "Sorry sir we don't accept cash". Me "So why don't you put that in your advertised price then"?
I and very many others complained and our corporate watchdog has changed the rules so they can only claim back the actual bank charges. A couple of companies didn't comply, were reported and fined big time.
Nothing wrong with such things being sorted by appointed bureaucrats, that's their role.

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