Adding 50p to the bill to cover the card machine feels like a pricing decision. It is not. It is a question with a legal answer, and for consumer cards the answer has been no since 13 January 2018.
It comes up most at the end of a bad month, when the merchant statement lands and the obvious move is to pass some of it on. So it is worth knowing where the line sits and what you can do instead.
The prohibition lives in regulation 6A of the Consumer Rights (Payment Surcharges) Regulations 2012, under the heading "Fees any payee must not charge any payer". It was inserted on 13 January 2018 by the Payment Services Regulations 2017.
Regulation 6A(1) stops a payee charging any fee in respect of payment made by payment instruments based on a card, where those are not commercial cards. In plain terms, a consumer debit card or a consumer credit card cannot carry a surcharge. Not a percentage, not a flat 50p, not a card handling fee bolted onto a booking.
Regulation 6A(2) does something separate and wider. Where a payee takes a payment by a payment instrument, any fee charged must not exceed the payee's own cost of using that instrument. So even where a fee is permitted at all, it is capped at cost rather than set at whatever the market will bear.
Regulation 6B sets the scope, and it is worth reading before assuming you fall outside it. Regulation 6A applies at all only if the payment service provider of the payer or of the payee is located in the United Kingdom. Where both are in the United Kingdom, both parts apply. Where only one of them is, the cost cap in 6A(2) applies but the outright ban in 6A(1) does not.
A UK venue with a UK acquirer serving UK customers sits squarely inside the full ban. A hotel taking a lot of bookings on cards issued abroad is in a more mixed position, which is a reason to ask your provider rather than guessing.
Commercial cards sit outside regulation 6A(1). A surcharge on a company card is not caught by the ban, which is why some business to business sellers still apply one.
Before copying that across to hospitality, two things make it awkward. The cost cap in 6A(2) still applies, so you would have to know your actual cost of accepting that specific card and charge no more than it. And you would have to identify the card type reliably at the moment of payment, on every transaction, in a queue. Most venues find the admin costs more than the recovery.
The money does not become yours. Under regulation 10, where a fee is charged in contravention of regulation 6A, any contract term requiring payment of that fee is unenforceable to the extent of the contravention, and the contract is treated as providing for the fee to be repaid.
So a surcharge collected quietly over a year is not revenue sitting safely in the account. It is money the regulations say is repayable.
If you cannot pass the cost on, the only lever left is the cost itself. Most operators have never seen how far apart its floor and its ceiling actually are.
Part of every card sale is interchange, paid to the bank that issued your customer's card. The Payment Systems Regulator caps it at 0.2 per cent of transaction value on consumer debit cards and 0.3 per cent on consumer credit cards, where the merchant, the acquirer and the card issuer are all in the UK.
Take a £40 restaurant bill and work it through. At the 0.2 per cent cap, interchange on that sale is 8p, because £40 multiplied by 0.002 is £0.08. On a consumer credit card at 0.3 per cent it is 12p.
Now put the same sale on a published flat rate. Square lists 1.75 per cent for transactions with UK cards. £40 multiplied by 0.0175 is £0.70.
So on one £40 bill the regulated floor is 8p and the flat rate is 70p. The difference is 62p on a single sale, and it is larger than the surcharge most venues were thinking of adding. That gap is not a law you have to accept. It is pricing, and which of the two UK card markets you belong in decides how much of it is available to you.
Two things get raised in the same breath as surcharging and are not the same thing at all.
A discount for paying one way rather than another is not a fee charged in respect of a card payment, and the regulations above are written about fees. That is a real distinction rather than a loophole, and it is the kind of thing worth having checked properly rather than taken from an article, this one included.
A minimum spend is not priced per payment either. What it runs into is card scheme rules, which are a separate set of rules from the law, set by the schemes and reaching you through your acquirer. Ask your acquirer in writing what yours permit. They will know, and the answer belongs in an email rather than in a phone call.
Worth being blunt about the limits.
The ban does not reduce what you pay. It removes one response to the cost and leaves the cost exactly where it was.
It does not touch the rest of the statement either. The percentage is one line among several, and the other charges sitting under it are where a good headline rate quietly becomes an ordinary one. A fixed amount charged on every authorisation behaves differently again, and lands hardest when your average sale is small.
And it does not make your card mix cheaper. Commercial cards and cards issued outside the UK sit outside the interchange caps, so a venue taking a lot of either will not see the floor described above.
We do charge an authorisation fee. It is priced per contract rather than published, and there are terms that are not on this website. In an article about what you are and are not allowed to charge, it would be poor form to leave one of our own charges out of it.
We charge no PCI compliance fee. Hardware, installation and upfront cost are free. Your rate depends on your turnover and your card mix, and we will quote it in writing before you commit to anything.
Not on consumer debit or consumer credit cards. Regulation 6A of the Consumer Rights (Payment Surcharges) Regulations 2012, in force since 13 January 2018, prohibits a payee charging any fee in respect of payment by a card based instrument that is not a commercial card. Commercial cards sit outside that ban, but any fee charged is still capped at the payee's own cost of accepting the payment.
It depends which of the two UK card markets you are in. The regulated floor is interchange, capped at 0.2 per cent on consumer debit and 0.3 per cent on consumer credit where the merchant, the acquirer and the issuer are all in the UK. A published flat rate sits well above that floor: Square lists 1.75 per cent on UK cards, which is 70p on a £40 sale against 8p of interchange.
For consumer cards, none. For commercial cards the ban does not apply, but regulation 6A(2) caps any fee at your own cost of accepting that payment, so you would need to know that cost per transaction and be able to identify the card type at the point of payment. In practice the simpler route is to reduce the cost rather than redistribute it.
Which is the question actually worth half an hour. Put last week's card takings and your current rate into the savings calculator and see what the gap looks like on your own numbers before anybody quotes you.
Send three months of card statements and one busy Friday. We will show you what your card processing is costing you now against what it would cost with us, with every fee named, before you commit to anything.
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