LONDON—British retailers will be forbidden from forcing customers to pay surcharges when they use a credit card, under new rules announced by the U.K.'s Treasury Ministry.
A report from NPR quoted U.K. Economic Secretary to the Treasury Stephen Barclay as saying that, "Rip-off charges have no place in a modern Britain."
Unlike in the U.S. where retailer card surcharges are not common and when they occur are small, British consumers sometimes face steep surcharges for using a credit card—as much as 20% for purchases such as airfare, the U.K. Treasury said in the NPR report.
The new rule, which takes effect in January, will also apply to government agencies. The government also said it will look at doing more to limit the costs of processing payments that credit card companies impose on retailers, NPR stated.
"These small charges can really add up and this change will mean shoppers across the country have that bit of extra cash to spend on the things that matter to them," Barclay stated in a release.
The government also said it will look at doing more to limit the costs of processing payments that credit card companies impose on retailers, NPR said, adding that the move will save British consumers hundreds of millions of dollars. NPR said that the Treasury cited figures from 2010 that showed the total value of surcharges for debit and credit cards was estimated at 473 million pounds — at least $700 million at the time.
NPR noted that in the U.S., at least 11 states forbid retailers from adding surcharges to credit card transactions.
“But many U.S. retailers are allowed to charge customers a surcharge for using plastic rather than cash, and even some states that outlaw surcharges allow stores to offer a discount for using cash,” NPR noted.