Over the last year, the change has impacted thousands of businesses, many of these small or medium enterprises (SME). Read more in the latest TRDP Retailer Insight on the Surcharge Ban.

February 13, 2019
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Surcharge Ban - Retailer Insights

In January 2018, the UK and pan-European ban on card surcharges was introduced, preventing additional charges being added to consumer credit and debit payments. It was estimated that in 2015, credit and debit card surcharges cost British consumers £166 million. The ban, enforced by Trading Standards, provides confidence to consumers that they won’t face any unexpected charges when paying by card.

More consumers are moving to cashless transactions. In retail, non-cash methods accounted for 76% of payments in 2017. While in the Convenience Sector, the move to card payments is lagging behind that of wider retail – with just under 9% of transactions being paid by Contactless or Card over the same period. Find our 2018 analysis of card payments in convenience here.

Over the last year, the change has impacted thousands of businesses, many of these small or medium enterprises (SME). The surcharge allowed business owners to pass the payment provider costs, such as terminal rental, merchant service fees and authorisation charges onto their customers. Although card processing fees have been capped by the EU Payment Services Directive since 2015, there are still costs to SME’s who accept payments by card. Passing these costs on is no longer an option, and with card payments becoming increasingly popular, SME’s have had to consider alternative ways to minimise these costs. Introducing a minimum card spend has proven to be a popular alternative. 56% of retailers use this method to reduce their costs. A typical minimum requirement is £5. This prevents smaller card transactions, which proportionally cost more for the business.

Using a minimum spend causes mixed reactions from consumers. Some retailers say that most customers are happy to increase their basket size to ensure that they can pay by card. Other customers are dissatisfied by this and would instead rather walk away empty handed than reach the minimum spend requirement.


‘Some people will continue to buy to reach the minimum. However, quite a few walk away disgruntled.’


‘Customers do not appreciate small business bank charges and state they don’t have a minimum spend at large supermarkets so some just will walk out.’


‘Since we have introduced a minimum spend of £5, it seems to have balanced with some topping up and some leaving.’

The surcharge ban hasn’t been wholeheartedly complied with. In the month of December 2018, around 20% of the shops we measured still applied surcharges to their customers – breaching EU law.

C-Stores face many problems such as economic and political uncertainty, retail crime, and industry competition, to name a few. Looking at the same set of Shop Data, we can see the average shop sales have decreased by 6.3% Year-on-Year. For C-stores, losing the right to charge consumers wanting to pay small amounts by card, or inconveniencing their customers with a minimum card spend is just another issue they have to face, with the reactions remaining uncertain.

When the surcharge ban was introduced, some convenience retailers removed all charges and now have ‘charge-less’ card payments, absorbing the cost as part of their overheads. Taking this financial hit is the most expensive alternative to the surcharge, but it is certainly a popular option with customers.

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