Credit Card Fees update

Posted on Updated on

You will be aware that since 13 January 2018 it has not been permissible to charge a different price for goods or services based on the method of payment, specifically you can no longer legally charge a credit card fee or conversely do much the same thing by offering discounts for say cash payments that would in effect make the credit card payments higher than the alternative.  The only exceptions are payment by business credit or business debit cards, where separate charges to recoup the actual cost of a B2B credit card transaction remain legal.

Unhelpfully it is still permissible to levy a surcharge for cash, cheque and bank transfers payments like direct debit, provided that the surcharge doesn’t exceed the actual processing cost you are attempting to recoup.  Typically, these type of surcharge payments are applied in areas like the payment of utility bills or in phone contracts and seldom on the routine sale of general goods and services.   More helpfully the new law still allows for the previous common practice of charging a booking, administrative, delivery or similar fees, provided now that the cost is the same to all customers, regardless of the means of payment.  The level of fee isn’t specified.  Understandably perhaps some businesses may be confusing the credit card regulation and the separate surcharge regulation and getting it wrong on credit card payments.

We reminded you about the credit card fee regulations last December, principally to ensure your plans and advance promotion for major events and other charged for destination based activities in 2019 – 20 reflected the new law and so that you could also remind key local partners and local businesses, should you feel it necessary.  My instinct is that those of you who mount your own events or facilitate others to do so may well get involved in ticketing or similar transactions, traditionally an area that has attracted a differential fees and payment structure.

What has changed since December? Nothing much, other than various consumer groups are rightly continuing to make the public aware of the issues and at least one television-based consumer investigation screened last weekend, ended by urging consumers who have been charged differential rates, regardless of amount involved, to seek to claim these back.  It is that call, which in the way of these things may well be picked up by other consumer groups, that has prompted this update.

Facing a future trading standards investigation and possible legal action is something that we would all wish to avoid.  Facing the administrative nightmare of a potential unexpected wave of retrospective reclaims, for previous unintended errors (back to Jan 18), however, small the individual sums or the total amount involved might be, doesn’t, in my view, bear thinking about.

I am far from certain about the detailed legal basis for claiming a refund, it will vary depending on precise circumstance in each case.  What is clear is that a proven illegal charge can be reclaimed and should be paid.  What the moral position might be, or the nature and scale of the reputational damage done, regardless of how you react to any such requests is a different matter.  On balance I doubt anything much will come of this and I have absolutely no desire to set hares running or to accidentally encourage the very thing I am trying to help you avoid. I raise it now on the basis that for any DMO that might be vulnerable to such claims, forewarned is forearmed.

If you have not already done so it may be worth checking that going forward your key partners are up to speed on this, if only to avoid finding at some later date that you have been inadvertently helping to publicly promote and/or support an illegal practice. Again, very much more of  an issue of protecting the destination’s reputational capital than any concern for material cost.

 

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