UK and EU payments laws are set to be overhauled in January 2018. We are all familiar with retailers imposing additional surcharges on the use of certain payment cards. This can be detrimental to certain card schemes and result in additional costs to retailers. In response, the UK Government has announced that it is banning surcharging on the use of all retail payment instruments. The new ban takes effect from 13 January 2018 and prohibits retailers and traders from charging consumers for using a credit or debit card when making a purchase. This development is covered in HM Treasury’s Response to its Consultation on PSD2 implementation and extends the surcharge prohibition beyond that required by PSD2, which was limited to a prohibition on fees for Visa and MasterCard payments. The prohibition is intended to create a clearer picture for consumers on the full price of goods to be paid and is viewed by the Government as easier to enforce than the current position in which merchants are able to pass on costs which are not ‘excessive’.

The move is welcomed as it creates a level playing field across all payment cards and does not prejudice pure three party card schemes which fall outside the scope of the Interchange Fee Regulation.

Once concern of respondents to the HMT consultation is the interaction of the blanket surcharge prohibition with interchange fees and in particular the significantly higher costs for processing debit cards regulated under the Interchange Fee Regulation, which took effect in December 2015. In the consultation response, the Government have said that they intend to engage with the industry on this topic in the coming months to assess the scale of the problem. Whether this will result in further changes to the retail payment industry remains to be seen.


Richard Powell is a Lead Knowledge Lawyer within Baker McKenzie's Financial Institutions Group where he is responsible for supporting the group's legal and technical knowledge.