The End of Extra Charges for Credit and Debit Cards in the EU
From January 2018, retailers and service providers will no longer be allowed to make additional charges for customers who use a credit or debit card. It stems from an EU directive which has been strengthened in the UK by our own government. There’s more on http://www.bbc.co.uk/news/business-40648641
This post won’t explore the sovereignty aspect. Several readers will object to the change on the grounds that charges should be controlled by market forces, i.e. customers will not agree to pay them if they are unreasonable. The plan does indeed contain elements of thinking from former Labour leader Ed Miliband.
My main objection, however, is on the grounds of fairness and effectiveness. Banks and credit card companies can still charge retailers for accepting card payments and impose higher charges on smaller retailers. In many cases, these retailers will simply stop accepting credit cards.
The first thing the EU and UK government should do is impose a single strict percentage cap on the fees imposed by banks and credit card companies on retail and other businesses for transactions by cash, cheques, debit cards and credit cards. The retailers could still decline to accept (say) cheques or credit cards if they wish to do so, but could not blame excessive bank charges for such decisions.
The second thing to do is be fair to credit card companies by repealing Section 75 of the Consumer Credit Act 1974. Under this, in certain circumstances, the provider of credit is equally liable with the provider of goods in cases where there has been misrepresentation or a breach of contract. In my view, credit card companies are in no way responsible and this compensation should be dealt with by a voluntary insurance arrangement.
