Credit & Debit Card Surcharges

Credit & Debit Card Surcharges

January 31st, 2018

Much confusion has been created in retail and consumer circles regarding the implementation of the Payment Services Directive 2 last week throughout Europe.IMPORTANT NOTICE

In Ireland, Article 19 of the Consumer Rights Directive made possible the application of charges by retailers or merchants of fees that approximated (or covered) the costs incurred by the trader in accepting credit cards/debit cards. This allowed a retailer to apply a surcharge to the end price of the products sold if the customer was electing to pay by credit/debit card.

As of last week, the PSD2 has superceded this Article and has effectively outlawed the practice of charging extra to consumers if they pay by credit/debit card. Retailers are still permitted to apply a minimum sale requirement (cards not accepted for sales below a certain amount), and can also refuse to accept payment by card for certain products/services.

With regard to the practice of surcharging for services; this is not affected by PSD2 – it only relates to credit cards and debit cards – not to the actual service provided.

Retailers cannot be expected to run any part of their business at a loss – therefore if you wish to continue to offer a particular service to your customers, (such as Bill Pay) or mobile phone top-up, you are entitled to surcharge for that service, once you make it clear (prior to paying) to the customer that the product/service incurs an additional charge – this can be by way of notice or verbally.

It is interesting (and infuriating) that the Department of Enterprise were not either informed or consulted by either the Department of Finance or the Central Bank on PSD2. They were unaware that Article 19 was to be superceded by the new Directive and have informed the Association that neither they or their competent authority, the Competition and Consumer Protection Commission (CCPC) have any responsibility for policing this new Directive.

The Directive only covers credit and debit cards which have bank interchange fees attached – this means that American Express and Diners Club (which are charge cards) are not protected against surcharging. Those retailers accepting such cards are still entitled (if they choose) to cover the cost of accepting these cards by way of a surcharge.

We will, as a matter of urgency, seek to meet with Central Bank Officials to ascertain what their intention regarding implementing a compliance regime will entail.


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