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Are Credit Card surcharges really banned?

View profile for Howard Robson
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As from 13th January 2018 businesses are no longer able to charge a consumer for payments made by credit card or debit card.

The detail of this ban is not easy to find but can be located in Schedule 8 of the Payment Services Regulations 2017. Schedule 8 amends a different set of regulations and inserts the new ban within the Consumer Rights (Payment Surcharges) Regulations 2012.

The new provision is relatively straightforward in its expression. The section prohibits businesses from charging surcharges to consumers if they pay by certain payment methods. These methods include payments by card, PayPal, Apple Pay etc.

Businesses can apply a charge to payments received with cheques or cash as these are outside the scope of the regulations.

There are some very limited and technical exceptions to the ban on surcharges but these do not apply to normal retail and non-financial services businesses, and in the financial sector only apply to the big “payment service providers” like banks.

The ban does not cover payments made with a commercial card. Whether the transaction is for business purposes or personal purposes is immaterial. This is unlike most legislation. What matters is if the consumer is using a card issued to a business.

Charges imposed by card providers on retailers for substantial transactions can be very significant and it has been suggested by some commentators that businesses are also prohibited from avoiding those charges by, for example, refusing to accept card payments for sums above a certain amount or only accepting such payments for on-line sales. They are not prohibited.

Enforcement of the ban

Whilst there is a prohibition, breaching it is not a criminal offence. A consumer who is charged a supplement could however, claim the money back from the business.

Trading Standards have the role of enforcing the ban. As it is not a criminal offence, they are able to do this by issuing the business with a notice telling them to desist from applying surcharges to transactions. If the business persists with the prohibited activity Trading Standards are able to obtain a court order requiring the business to desist. The consequences of a business ignoring the court order are an unlimited fine and/or imprisonment of the responsible officers of the business.

Telling a consumer that a surcharge is lawful if it is not, could be a criminal offence under The Consumer Protection from Unfair Trading Regulations 2008.

Will the ban be effective?

Whilst the ban will prohibit businesses and organs of the state from charging a handling fee for processing a transaction, they are likely to recover those costs elsewhere.

Just Eat have already ‘re-branded’ their 50p card surcharge to be a “service charge”. This new charge now applies to all orders, irrespective of whether the consumer is paying by cash or card. This illustrates that businesses may now increase their prices rather than having a separate charge.

In light of the legislation, HMRC have also changed their policy and now will not accept personal credit card payments at all. This could cause a lot of disruption and inconvenience to tax payers.

Some businesses used to use the surcharge as a way of increasing their profits, as they would charge the consumer more than the cost of the charge they incurred themselves even though this practice has been banned since 6th April 2013. That method of increasing profit is now doubly banned so we are likely to see price increases to maintain profitability.

It is possible that the introduction of the ban could encourage more price competition between credit card companies and banks over the amounts they charge businesses for each transaction. It may result in businesses ceasing to accept certain types of credit card. It is likely that we will see an increase in businesses refusing all card payments if the transaction is over a certain amount. 

If you have questions regarding payments methods for your business or the ban of credit card surcharges, you can contact Howard or the Employment team on 02380 717717 or email


This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice. All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.