An end to payment surcharges?

Since the implementation of the Consumer Rights (Payment Surcharges) Regulations 2012 on 6 April 2013, businesses selling to consumers have been prohibited from charging fees for use of a particular payment method that exceed the cost borne by that business for the use of that method.

Upon implementation of PSD2 in the UK on 13 January 2018, new prohibitions will be effective for both B2C and B2B commercial contracts.

Business-to-consumer

A business will be prohibited from imposing any surcharge on a consumer for most types of retail payment transactions. The UK has opted for a wide-ranging application of this prohibition, and it will apply to all debit and credit cards, online payments and direct debits.

The above prohibition, however, only applies if the payment service providers of both the business and the consumer are located in the EEA. If only one of the payment service providers is based in the EEA, then a business is prohibited from charging excessive surcharges on payments.

Where a business may charge surcharges that are not excessive, businesses should bear in mind the obligations under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, which require the express consent of a consumer for that surcharge prior to contract formation.

Business-to-business

Businesses will now be prohibited from charging excessive payment surcharges if at least one of the business' payment service providers are located in the EEA.

Exceptions

The new prohibitions have wide application and are likely to catch most types of charges applicable to the use of particular payment methods. That said, the position is nuanced and there are multiple exceptions. In particular, booking fees are outside the scope of the prohibitions (provided such fees do not vary depending on the payment method used) and, in some circumstances, discounts for particular payment methods may be acceptable.