- This guidance is for England, Scotland & Wales
If you make a charge for accepting payment by credit card, debit card or any other method, this may be governed by the Consumer Rights (Payment Surcharges) Regulations 2012. The Regulations limit charges in relation to the payment methods used when buying goods and services. This guidance seeks to explain these Regulations and how you may charge customers for offering these payment facilities.
The purpose of the Regulations is to:
- increase price transparency, which will enable consumers to choose effectively between different products and services
- make the charges reflective of the actual cost to your business
- encourage fair competition
The Regulations only apply to contracts made between businesses and consumers.
- Restrictions on payment charges
Businesses are allowed to make a charge for accepting a payment by credit or debit card or by any other method - for example, cash, electronic money services, cheques, prepaid cards, charge cards and direct debits. However, under the Consumer Rights (Payment Surcharges) Regulations 2012, if the customer has to pay a surcharge for using a particular method of payment, then that surcharge must not be more than it costs the business to process that method of payment. The Regulations do not specify any maximum amounts as the costs should reflect the actual cost to the individual business of processing the payment.
A business can apply the payment surcharge on the basis of the average cost incurred in processing payment by a particular means.
Where a surcharge is made for any payment method, this information must not be hidden. Under the Consumer Protection from Unfair Trading Regulations 2008, a business must not give misleading information to consumers, nor may it hide or omit information that the consumer needs in order to make an informed decision.
In general, this means that information about the existence and amount of any payment surcharges should be made available to the consumer up front, alongside the main price they will pay. In addition, if such charges are made for a type of product or service or for a method of payment where charges are unusual and are likely to come as a surprise to the consumer, then special attention should be drawn to those charges before the consumer invests his time and effort in choosing a product or starting to place an order.
Businesses may still also charge booking fees and administrative fees of any amount, as long as these are the same irrespective of the payment method. For example, a booking fee that is £10, or is 10% of the total price, regardless of whether payment is by cash, debit card or another method, is not a payment surcharge and is not covered by the Regulations. Note, however, that the price of a product, whether goods, services or digital content, must be quoted inclusive of any non-optional surcharges.
- Definitions of businesses & consumers
The Regulations only apply to contracts concluded between businesses and consumers.
A consumer is a person who enters the contract for purposes that are wholly or mainly outside the person's trade, business, craft or profession.
A business is a person acting for purposes relating to that person's trade, business, craft or profession whether they are an individual, partnership or an organisation.
Business-to-business contracts are not subject to the Regulations.
- Application of the Regulations
The Regulations apply to contracts however they are concluded. They will therefore apply regardless of the method of sale. They cover contracts concluded on business premises, contracts concluded away from business premises and those concluded at a distance (for example, a purchase via the internet or on the telephone).
- Excluded contracts
The Regulations do not apply to certain excluded contracts, which are listed below:
- contracts for social services, including social housing, childcare and support of families and persons permanently or temporarily in need (including long-term care)
- contracts for health services provided, whether or not via healthcare facilities, by health professionals to patients to assess, maintain or restore their state of health, including the prescription, dispensation and provision of medicinal products and medical devices
- contracts for gambling within the meaning of the Gambling Act 2005
- contracts for services of a banking, credit, insurance, personal pension, investment or payment nature
- contracts for the creation of immovable property or of rights in immovable property
- contracts for rental of accommodation for residential purposes
- contracts for the construction of new buildings or the construction of substantially new buildings by the conversion of existing buildings
- contracts that fall within the scope of European law relating to the protection of consumers in respect of certain aspects of timeshare, long-term holiday products, resale and exchange contracts
- contracts for the supply of foodstuffs, beverages or other goods intended for current consumption in the household that are supplied by a trader on frequent and regular rounds to the consumer's home, residence or workplace
- contracts concluded by means of automatic vending machines or automated commercial premises
- contracts concluded with a telecommunications operator through a public telephone for the use of the telephone
- contracts concluded for the use of one single connection, by telephone, internet or fax, established by a consumer
- sales of goods by way of execution or otherwise by authority of law - for example, goods seized by court bailiffs and sold to satisfy a debt under a judgment of the court
Further detail on these excluded contracts is available in the BEIS guidance (see below).
If a trader fails to comply with the requirements above, trading standards services can apply for a court order requiring them to comply. If the order is not complied with the maximum penalty is a fine and two years' imprisonment.
- Consumers' right of redress
Consumers are entitled to seek redress if asked for a payment surcharge that is more than allowed by the Regulations. If the fee has not yet been paid, then the trader cannot make the consumer pay it; if it has been paid, it must be refunded. The consumer can take legal action to recover their money. This right applies whether or not enforcement action has also been taken by trading standards.
- Further reading
The Department for Business, Energy and Industrial Strategy (BEIS, which was known as the Department for Business, Innovation and Skills at the time) has published more detailed guidance on the Consumer Rights (Payment Surcharges) Regulations 2012.
- Key legislation
- Enterprise Act 2002
- Gambling Act 2005
- Consumer Protection from Unfair Trading Regulations 2008
- Consumer Rights (Payment Surcharges) Regulations 2012
Last reviewed / updated: December 2016
This information is intended for guidance; only the courts can give an authoritative interpretation of the law.
The guide's 'Key legislation' links may only show the original version of the legislation, although some amending legislation is linked to separately where it is directly related to the content of a guide. Information on amendments to UK legislation can be found on each link's 'More Resources' tab; amendments to EU legislation are usually incorporated into the text.
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