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New ban on “rip-off” charges for card payments comes into force

PUBLISHED: 08:48 12 January 2018 | UPDATED: 15:24 12 January 2018

Businesses from takeaway apps to global airlines have charged levies on credit or debit card payments. Picture: YakobchukOlena/Getty Images/iStockphoto

Businesses from takeaway apps to global airlines have charged levies on credit or debit card payments. Picture: YakobchukOlena/Getty Images/iStockphoto

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Companies will no longer be able to charge “rip-off” fees to customers who pay by card as new rules come into force.

Under a ban which come into effect on January 13, firms cannot charge customers up to 20% more for purchases such as flights just for paying with a credit or debit card.

But it comes amid concerns that the cost of goods and services may creep up, or additional fees added by retailers, to compensate for the changes.

MORE: What you need to know about the ban on card payment surcharges

Takeaway firm Just Eat has already drawn criticism for introducing a 50p “service charge” on all orders after previously levying a 50p surcharge on card payments.

Consumer groups have welcomed the ban, but are urging shoppers to report any retailers they believe are flouting the new rules.

The surcharges have been commonly added by businesses on customers who pay by card or use other services such as PayPal. They usually say the fee is to cover the cost of processing a card payment.

The rules will also tackle surcharging by local councils and government agencies such as the DVLA.

It is estimated that surcharging cost Britons £166m in 2015.

John Glen, economic secretary to the Treasury, said: “It’s completely unfair for someone to be hit by a hidden fee just before they are about to make a purchase, so by scrapping these rip-off charges we are helping to give power back to the consumer.”

Gareth Shaw, from Which? Money, said: “This ban should finally stop consumers being penalised simply for using their card. However, people will be wary if it results in price increases, minimum spend limits or even cards being refused by retailers.

“The government and regulator need to closely monitor the effectiveness of the ban – and the fees banks charge retailers for card payments – to ensure that it has the positive impact for consumers originally intended.”

Helen Saxon, chief money analyst at MoneySavingExpert.com, said scrapping card surcharges may be good news, but could result in extra credit card fees popping up, for example in booking or transaction fees.

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