Q&A: How Will the Card Surcharge Ban Work in Practice?

by Brian Riley 0

credit card

 Payments is a pretty simple business, though if you ask a European, you would wonder how simple it really is.

The question du jour is on credit card service surcharges, as Europe scrambles to meet their deliverables for the new payment services directive [Mercator Subscribers, see this report]. Now, even as the EU faces Brexit, consumers and merchants are confused as to how card acceptance will change now that merchants can no longer surcharge to offset interchange costs.

• The directive – known as the Payment Services Directive (PSD2) – will make it illegal for any business to charge extra for using a debit or credit card in the EU.

• The worst offenders at the moment tend to be airlines, theatre and concert booking sites, take-away food apps, local councils and the Driver and Vehicle Licensing Agency (DVLA).

• All will have to change their payment policies.

The US resolve, which is notable because it is the world’s largest credit card market and home of four top payment networks, is easy. If you don’t want to assume the cost of accepting credit cards, you don’t have to accept them. Seems easy enough to me. Payment networks are private businesses owned by stockholders; they are not social entities.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

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