“Rip off” credit card fees in the UK stopped from next year

Britons are rejoicing after news that debit and credit card fees added to online and in store payments are set to be scrapped from January.

Shoppers will be saving hundreds of millions of pounds each year in light of the surcharge ban, which was announced this week by the Treasury.

Anything from booking flights online to ordering a takeaway can be subject to credit card surcharges, which has long been the scourge of consumers who have always seen them as unnecessary and an act of greed on behalf of the retailer.

The surcharges have long been part of the landscape of consumer Britain, and result from an EU directive.

A government spokesperson said that “shoppers across the country would have that bit of extra cash to spend on the things that matter to them.”

But while savvy shoppers celebrate, others fear that the loss of income will force companies to simply hike their prices up to compensate for the surcharge ban.

Many consumers have been approaching the press to complain at what they call an “extortion racket”. In an article in the Independent in 2015, one reader remarked about the £5.25 surcharge of each of two tickets to see comedian Michael McIntyre – a total fee of £10.50.

Airlines have been charging up to 2 per cent for any payment made by credit card, with organisations like the DVLA adding a flat fee of £2.50 to car tax payments paid by credit card. Their internal data has suggested that this adds an extra £8.5million per year to the coffers.

According to the Guardian, HM Revenue & Customs charges credit card fees for paying a tax bill, which ranges from 0.374% to 2.406%, depending on whether it is a personal or corporate card – but, like the DVLA, it will no longer be able to do this from 13 January 2019.

Recent figures do not seem to exist, but in 2010, government figures had calculated that credit card fees and debit surcharges made around £316m and £630m that year alone.

The Treasury, the Guardian said, acknowledged that while this change was the result of an EU directive that related to Visa and MasterCard surcharges, the UK was “going further” by also banning charges for holders of American Express cards and users of services such as PayPal and Apple Pay.

The consumer group Which? said the ending of surcharging was “long overdue”. It added: “Previous action to protect consumers from excessive card surcharges has been difficult to enforce, leaving consumers paying over the odds just for paying by card. These new rules will finally put an end to this unfair practice.”

Guy Anker, managing editor of the MoneySavingExpert.com website, said scrapping these charges was good news for millions of consumers but warned: “We expect some companies will raise prices for all to compensate for the loss, which could hit those who currently pay in cash or by debit card.”

Stephen Barclay, the 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.”