Can you charge customers for using a credit or debit card?

11th July 2013

The increasing cost of operating a credit or debit card system has led to many businesses introducing a charge for customers. Typically, businesses will impose the charge for transactions under a certain figure, such as £5.

Under the Consumer Rights (Payment Surcharges) Regulations 2012, the levying of such a surcharge is prohibited where such fees exceed the cost to your business.

The government has published guidance on what will be considered an “excessive fee” – click here for details.

The charges which the government believes businesses are entitled to levy, as set out in the guidance, are:

  • merchant service charge, which traders pay to their acquiring bank;
  • IT and equipment costs used for particular means of payment such as card terminals, for example point of sale devices;
  • risk management – active fraud detection and prevention measures which vary depending on their business and whether transactions take place face to face or remotely; and
  • processing fees, such as charges for reversing or refunding a payment.

Indirect costs which cannot be attributable to the use of cards should not be included.

The regulations came into force in relation to all contracts entered into after 6th April 2013. Existing and new micro businesses (those with less than 10 staff) have an exemption until 12th June 2014. However, after 12th June 2014 all businesses will be expected to comply.

Failure to comply with the regulations can lead to an enforcement action including an injunction against the business. It may also lead to a dispute or litigation with your customer who will be able to claim back the charges.

If you are unsure about whether these regulations will cause you a problem contact dispute resolution partner Martin de Ridder on 01543 431 186 or email