Ban on 'rip-off' card surcharges comes into force

A ban on "rip-off" surcharges comes into force today in a move that the Government hopes will stop shoppers from being penalised if they're paying with a debit or credit card.

Economic Secretary to the Treasury John Glenn says it's a response to public frustration.

"I think for too long consumers have been fed up when they get this sneaky charge added to the end of a transaction be it online or anywhere... this ban will go for debit, credit cards and PayPal (TLO: PYPL-U.TI - news) including Amex, so there is no uncertainty," he said.

:: What will card surcharge ban mean for firms?

Surcharges cost UK consumers £166m a year in 2015. Often the justification from businesses is that they're charged high costs to process the payments by the credit card companies or banks.

Small business owner Guy Lachlan, whose company Classic Oils Ltd supplies lubricants for classic cars, believes the Government is wrong to go after the retailers.

"Credit cards are very expensive to accept, they vary depending on the type of card," he told Sky News.

"The Government perhaps should have looked at the cosy cartel of the credit card system in general. Big retailers, surprise surprise, pay lower fees and smaller retailers pay higher fees.

"Don't get me wrong every form of payment has a cost associated with it, but the question is are they fair?"

The new rules are being enforced by Trading Standards which has the power to take civil enforcement action against traders who breach the regulations.

Companies like Just Eat (Frankfurt: A1100K - news) have already made sure they won't be out of pocket - and been criticised for working around the new rules. Instead of singling out card payments it's introduced a new blanket service charge of 50p on all its orders, even if you're paying cash.

Gareth Shaw, a money expert at Which?, says he expects other businesses might opt for a similar solution.

"Some firms have said they will inevitably increase prices in order to cover the cost of processing payments, whereas others out there have said absolutely not," he said.

"Really it's down to you as a consumer to seek out the best deal and if you're not happy with the price of goods or service, you can vote with your feet and go elsewhere."