As of 13th January 2018, consumers cannot be charged extra for paying by debit or credit card by law.

The rules will apply to any UK company selling to UK consumers and will also apply to online payments, including American Express and PayPal or Apple Pay.

Although this is a new UK law, it follows an EU directive, which bans surcharges on Visa and Mastercard charges. This means that other countries in the European Union will also be rolling out bans for debit and credit card surcharges, though the UK has gone further by banning Amex and Paypal, too.

The main aim of the law is to stop companies from penalising consumers for using their card, an increasingly popular payment method, and to ensure that companies do not profit from debit and credit card transactions.

While the idea has been welcomed by many consumers, many others have concerns that this will only lead to overall price increases, penalising even those choosing to pay cash. Banks typically charge large retailers between 10p and 20p for each debit card transaction, or 0.6% for credit cards. For many small businesses, the card payment charge really helps out. There’s a worry that the ban on surcharges may mean an increase in the use of cards as payment, and local retailers will just be unable to absorb these costs.

As usual with these things, I fear that we will just have to wait and see what the widespread impact of such a change will be.

James Mitchell, Senior Client Manager at d&t chartered accountants

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