The government has recently announced plans to scrap credit card fees, making it illegal to charge customers in the UK.
Businesses regularly charge customers a fee for paying with a credit card, and in some cases even for paying with a debit card or the payment service PayPal.
Yet, the government said such fees, which can mount up to 20 per cent, would be banned from January 2018. The amount collected through these charges, which are supposed to only reflect the case of the processing payments, was nearly £500m in 2010.
Economic secretary to the Treasury, Stephen Barclay 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. These small charges can really add up and this change will mean shoppers across the country have that bit of extra cash to spend on things that really matter to them.”
However, some experts fear that banning surcharges will simply lead to businesses to push up their prices. Larger businesses such as airlines may absorb the costs to remain competitive, but smaller companies could find themselves under great pressure.
The government has previously capped the costs that businesses face for processing card payments, reducing the interchange fee, and said it will engage with retailers to assess if there is “any more that can be done to help.”
The move is part of a broader push by the government to help families with the cost of living by raising their household incomes.
One person briefed on the plan said it is aimed at making costs more transparent, so consumers know what they are being charged upfront.