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Excessive charges for use of credit and debit cards to be banned

A new consultation will be launched on Monday to look at banning above cost payment surcharges; a measure the UK will put in place to bring …

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

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A new consultation will be launched on Monday to look at banning above cost payment surcharges; a measure the UK will put in place to bring part of the European Union’s Consumer Rights Directive into force. Traders will no longer be able to make a profit by charging the consumer for credit or debit card use above the amount it costs them to process that payment. This ensures that consumers are aware of the level of costs they are committing to and that traders who treat consumers fairly are not disadvantaged by those who use less transparent practices to lure consumers towards less competitive offers.

Norman Lamb said,

“We want consumers to be able to pay for their goods and services without being hit by excessive hidden charges. That is why we are consulting on limiting the fees that traders can charge to consumers for using particular methods of payment. It can often be frustrating when purchasing a product or a service online, to find out only towards the end of the transaction that the final price is much higher due to things like payment surcharges. These proposals will stop companies from adding on these excessive charges, and allow consumers to see a clearer and more transparent breakdown of what they are paying for.

“These proposals are a welcome and important step for consumer empowerment, not just in the UK but across the EU. They form part of a wider strategy to simplify, strengthen and modernise consumer and competition frameworks. This Government is committed to delivering growth, and increasing consumer confidence will help markets work at their best.”

Consumers who fully understand the final price they will pay for a product benefit from being able to make fairer comparisons and more cost-efficient purchases. They are more empowered to make better purchasing decisions, which leads to a more competitive market where businesses truly compete on the value of a product rather than artificial prices which consumers will in reality find hard to obtain.

In December 2011, the Government announced plans to stop businesses from charging consumers excessive payment surcharges. This came in response to recommendations from the Office of Fair Trading (OFT), after the consumer body Which? highlighted the scale of the problem. The work will complement enforcement and compliance work by the OFT to ensure that add-on charges generally are transparent and consumers are able to compare prices more effectively.

The consultation will seek views on the timing of the implementation and how best to apply the proposals. Consultation responses will help the Government to make sure the provisions are useful and achieve their objectives, and inform the content of guidance for businesses to assist them in complying with the new provisions.

**Notes to editors

**1. The consultation will be available to view and comment on at www.bis.gov.uk/consultations from Monday 3rd September 2012.

  1. The Consumer Rights Directive can be found on the European Commission website at http://ec.europa.eu/justice/consumer-marketing/rights-contracts/directive/index_en.htm

  2. The UK is required to apply the provisions of the Consumer Rights Directive to all contracts between traders and consumers, but with some exceptions. These are notably financial services, gambling, healthcare by regulated professionals, social services, package travel, timeshare, property transactions, and most aspects of passenger transport. The UK Government may, but is not required to, introduce national legislation corresponding to the Directive for these sectors, and the consultation seeks views on ones that the UK may want to consider including.

  3. The Government’s economic policy objective is to achieve ‘strong, sustainable and balanced growth that is more evenly shared across the country and between industries.’ It set four ambitions in the ‘Plan for Growth’ (PDF 1.7MB), published at Budget 2011:

  • To create the most competitive tax system in the G20
  • To make the UK the best place in Europe to start, finance and grow a business
  • To encourage investment and exports as a route to a more balanced economy
  • To create a more educated workforce that is the most flexible in Europe.

Work is underway across Government to achieve these ambitions, including progress on more than 250 measures as part of the Growth Review. Developing an Industrial Strategy gives new impetus to this work by providing businesses, investors and the public with more clarity about the long-term direction in which the Government wants the economy to travel.

  1. BIS’s online newsroom contains the latest press notices, speeches, as well as video and images for download. It also features an up to date list of BIS press office contacts. See http://www.bis.gov.uk/newsroom for more information.

Notes to Editors

Contact Information

Name BIS Press Office Job Title

Division Department for Business, Innovation & Skills Phone

Fax

Mobile

Email bispress.releases@bis.gsi.gov.uk

Name Syeda Hasnain Job Title

Division Department for Business, Innovation & Skills Phone 020 7215 6245 Fax

Mobile

Email syeda.hasnain@bis.gsi.gov.uk

Published 1 September 2012