Government to stop card payment surcharges

Online payment processors can charge anything  from 1.5% to 3.5% per transaction;  and some charge a monthly fee as well. Current regulations state that accommodation providers cannot add a charge that exceeds the direct cost of managing the transaction, but you can pass on the actual cost.

As of 13th January 2018, that will stop.

Holiday rental owners will not be allowed to apply additional charges to guests that choose to pay by credit or debit card. This is the result of an EU directive to ban surcharges on Visa and Mastercard purchases. The UK legislation goes a little further and will see a ban on charges on PayPal and American Express cards as well.

The estimated total value of surcharges was £473 million in 2010 according to figures from the Treasury. In a GOV.UK article, Stephen Barclay who is Economic Secretary to the Treasury states:

“This is about fairness and transparency, and so from next year there will be no more nasty surprises for people at the check-out just for using a card .”

The aim is to save consumers this cost. But the expense doesn’t simply disappear; the holiday rental property owners and agencies will still be charged for processing card payments. So, if your current model is to add an extra fee for guests who choose to pay with their credit or debit cards, what do you plan to do?

Will you absorb the fees? Increase your prices? Increase the booking fee? Or if you are an agency, do you plan to increase commission costs to owners? And will they in turn increase their prices?

We carried out some research to find out.