U.K. Bans Surcharges on Credit Card Transactions
In the U.K., the finance ministry has ruled that companies can no longer charge an additional fee on transactions completed with credit cards.
The ministry’s most recent study found these fees, which they call “rip-off charges,” had reached £473 million ($617 million) in 2010.
“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,” Stephen Barclay, economic secretary to the Treasury. “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 the things that matter to them.”
The European Union has already eliminated fees for using Visa and MasterCard credit cards, but the U.K. has gone further in banning surcharges on American Express cards, PayPal, and Apple Pay.
The changes will go into effect on January 13.
A similar debate is currently ongoing in the United States. In several states, it is illegal for merchants to charge more for transactions if the customer is paying with a credit card. While companies can offer discounts to customers paying with cash, the credit card surcharges cannot be advertised and are technically illegal. The Supreme Court has recently sided with merchants and ordered a lower court to rule on whether these rules violate the First Amendment.