13 January 2018 – car dealers CANNOT pass on card surcharges to customers

You read it correctly!  The law changes on that date.  Up to 12 January 2018, a seller of goods was only allowed to pass on the actual charge they would incur by the card provider. Of course that was rather unrealistic because sellers did not know what that charge would be until after the event and could vary considerably from one transaction to another. This resulted in many small shops imposing a 50p charge for paying by any form of card and regardless of how much the purchases cost.

HOWEVER, from 13 January 2018 it is no longer legal for ANY card surcharges to be imposed on the buyer.  Where a buyer pays for a vehicle by debit or (in particular) credit card the seller can incur some not insignificant charges.  From this date you CANNOT pass those charges on to the customer.

Furthermore, you cannot impose a charge for those who opt to pay by American Express, Paypal, Applepay etc.  If you do, the customer can expect you to pay back the extra fee that they paid.  Enforcement of the law is by Trading Standards.

You can, of course, refuse to take card payments at all, or cap how much you will take on a card.  However, you will need to make this clear before the customer comes to your site and so you will need to refer to it in your advertising as well as on site.

The other alternative would be to simply increase your prices but you can only do this “across the board” and you must not agree to reduce the price for cash payments or bank transfer.  If you are going to impose an “admin fee” this must, again, be “across the board” and be the same - regardless of method of payment.  The “admin” fee MUST be in your headline price and not hidden away in your small print.

We expect this new law to affect many of our members and, as a consequence, our advice may be added to or change as the law takes effect.  Clients are therefore advised to read their legal updates regularly as we are likely to use this method to answer questions that will be asked of us over the coming weeks in particular.

Also, the law comes from a European Directive it will NOT be automatically void after Brexit – unless the UK government decides to pro-actively change that law, which is unlikely.

How the new regulation will affect business card transactions can be found in a more recent legal update.


Authors: Jason Williams

Published: 09 Jan 2018


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