Government Departments: Credit Cards

HM Treasury written question – answered on 24th April 2017.

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Photo of Madeleine Moon Madeleine Moon Chair, Defence Sub-Committee, Chair, Defence Sub-Committee

To ask Mr Chancellor of the Exchequer, if he will publish a list of government departments and agencies that apply a surcharge when customers make payments by credit card.

Photo of Madeleine Moon Madeleine Moon Chair, Defence Sub-Committee, Chair, Defence Sub-Committee

To ask Mr Chancellor of the Exchequer, pursuant to the Answer of 22 March 2017 to Question 67778, if he will make it his policy to end the practice of (a) the DVLA and (b) other Government agencies who impose a credit card surcharge greater than the 0.3 per cent cap for credit transactions.

Photo of Simon Kirby Simon Kirby The Economic Secretary to the Treasury

HM Treasury has not made an analysis of the Government departments and agencies that apply a surcharge when customers make payments by credit card.

However, from January 2018 the Payment Services Directive 2 (PSD2) introduces a ban on surcharging which means that retailers will no longer be able to charge consumers to use payment instruments for which interchange fees are regulated, which includes the majority of consumer debit and credit cards.

Merchants currently pay a merchant service charge to process all card transactions. Part of this covers the fees that a merchant acquirer can be charged by a card issuing bank for processing transactions known as interchange fees. The Interchange Fee Regulation (IFR), which came into force in December 2015, caps the fees that could be passed on to consumers from merchants in the form of higher prices at 0.2% and 0.3% for debit and credit cards respectively.

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