Ban on 'rip-off' card surcharges to take effect

Credit card fee ban

Credit card fee ban

But Helen Saxon, from MoneySavingExpert.com, warned: "It may be that we see the amount that used to be charged in credit card fees popping".

The surcharges have been commonly added by businesses ranging from takeaway apps to global airlines on customers who pay by card or use other services such as PayPal.

Companies are no longer allowed to charge customers up to 20 per cent more for purchases such as flights just for paying with a credit card under the new rules that take effect on January 13.

HMRC itself in December said it would stop accepting payments by personal credit cards as a result of the ban, saying: "As a public funded body, HMRC is unable to absorb the cost of personal credit card fees as this would ultimately mean charging the fees back to customers through the public purse".

Takeaway firm Just Eat has already drawn criticism for introducing a 50p "service charge" on all orders after previously levying a 50p surcharge on card payments.

"As we build a fairer society, this added transparency ensures buyers can make informed choices about how they spend their hard-earned money".

They also called on shoppers to report anyone flouting the rules.

Gareth Shaw, from Which? However, people will be wary if it results in price increases, minimum spend limits or even cards being refused by retailers.

Consumer groups said the Government needed to monitor the ban to make sure it was having "the positive impact for consumers originally intended".

Federation of Small Businesses national chairman Mike Cherry said: "The proportion of small firms reporting a rise in operating costs is now at a five-year high".

However, he added: "With access to cash restricted by a rapidly diminishing bank branch network and threats to ATM funding, small firms now find themselves between a rock and a hard place when it comes to customer payments".

Some small firms fear the move will add to their costs, and encourage more to accept cash payments only.

"Removing their freedom to share the burden of card payment fees will give them yet another outgoing to worry about".

The aim is to usher in a "revolution" to make it easier for consumers to compare products and thus boost competition in financial and other services.