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Payment Surcharging

Payment surcharging is when a fee is charged for the use of a particular payment method, most typically for a debit or credit card. New regulations came into force on 13 January 2018, banning retailers from surcharging consumers for the use of a specified payment method and restricting surcharges for commercial transactions. 

The Regulations do not impact the right for retailers to enforce a minimum spend limit for use of a payment method or handling fees for grocery deliveries, for example a £5 or £10 minimum spend. The Regulations also do not require retailers to offer specified payment methods. The Regulations apply to all businesses and regardless of where a transaction is completed, for example in a shop, online or over the phone.

This document only provides an overview of the Government’ guidance available here and the regulations available here.


The Consumer Rights (Payment Surcharges) Regulations 2012 banned retailers from issuing payment surcharges that exceed the cost of providing that payment method. The Second EU Payment Services Directive was brought forward in 2015 to ban payment surcharging completely for business to consumer transactions.  The Payment Services Regulations 2017 amend the 2012 regulations by enforcing this requirement of the Second EU Payment Services Directive from 13 January 2018.

The regulations intend to prevent consumers being unaware of the total cost of a transaction until a consumer proceeds with a purchase due to unclear payment surcharges.  

Retail to Consumer Transactions

Retailers are banned from applying a surcharge on a transaction to a customer for their choice of payment method. The ban applies to most payment methods, including debit and credit cards, PayPal and direct debits. Retailers are still permitted to; implement a minimum spend or stop accepting a certain card payment method completely. Retailers can still charge consumers for the use of an ATM.

Customers are entitled to receive a refund of any unlawful surcharge and take legal action if necessary. Trading Standards also have civil enforcement powers against breaches of the regulations.

Commercial Transactions

For business to business transactions, for example from a wholesaler to retailer or the payment of utility bills, surcharges are permitted but cannot exceed the costs incurred by the merchant in processing the transaction using the chosen payment method. This limitation applies to any payment method, including cash, prepaid cards, debit and credit cards, but does not cover banking services.

A legitimate surcharge can be calculated from fees charged to the merchant through their payment service provider or intermediary. These fees typically cover the Merchant Service Charge, including the interchange fee paid by the company’s payment service provider to the card issuer and the margin retained by the retailer’s payment service provider to cover costs and profit. A charge can then be imposed based on average transaction costs for that payment method, as a flat fee or percentage of headline price but must be clearly advertised to the business customer.