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Surcharge ban under PSD2 - What, why and when?
Surcharge ban under PSD2 - What, why and when?

Explains the scope of the surcharge ban (covered by PSD2) for EEA based businesses that came into effect on 13th January 2018.

Anni avatar
Written by Anni
Updated today

The Second Payment Services Directive (PSD2) introduces new rules for online payments and financial services in Europe. This article focuses on one key consequence of PSD2: the ban on surcharges for card payments.

This article covers:


The surcharge ban

The PSD2 surcharge ban, effective from January 13, 2018, applies to all businesses in the European Economic Area (EEA) and prohibits extra fees on debit or credit card payments. Each country has the authority to decide how to implement and define the rules.

In the UK, the Treasury extended the ban to cover PayPal transactions. The ban applies to payments made via all major card providers (e.g., Visa, Mastercard, etc.).


What should I do?

If you're a business within the EEA and charging additional fees for online payments, you must disable these fees to comply with the law. However, there are two possible workarounds:

  1. If you only accept online payments and do not offer non-card methods (like cash, cheque, or bank transfer), you can still apply fees. This isn't seen as discrimination against card-paying customers since all customers are charged the same fee.

  2. You can apply a fee for both online and offline payments to ensure there is no discrimination against card payers, as everyone incurs the same fee regardless of the payment method.

💡 Important note: We do not currently support the ability to add fees to non-card (offline) payments. However, you might want to consider raising your ticket prices to include the fee.


 

Switching off your payment fees on Bookwhen

To switch off your payment fees:

  1. Select Settings, then Payments from the left-hand menu on your account.

  2. Select Manage next to your provider to open the settings:

    Payments screen with the payment provider section highlighted

  3. Select Edit next to Online payment fee to open the settings:

    Online payment fee section highlighted with an arrow pointing at the 'Edit' button

  4. Then untick the Add an online payment fee to bookings checkbox:

    Online payment fee setting with arrow pointing at the 'Add an online payment fee to bookings' checkbox

  5. Select Save to save your changes.


Can I increase my ticket prices to compensate?

You can adjust your ticket prices to account for both online and offline payments.

However, keep the following in mind:

  • It can be difficult to cover the fee entirely because payment providers have a precise charging structure (flat fee + percentage per transaction).

  • Striking the right balance between covering costs and avoiding overcharging customers can be challenging, so proceed carefully when adjusting your prices.


Guidance for UK businesses

You can add a surcharge to cover only the online payment gateway processing fees. The surcharge must match the fees charged by the payment platform you’re using. For example, Stripe currently charges 1.5% + 20p, and you cannot exceed this amount.

However, there are exceptions, and some charges can be legitimately applied:

  • Cost of Processing: Traders can charge customers the exact cost of processing payments. For example, if a business incurs a fee for processing a particular card payment, it can pass on this fee to the customer. The surcharge must not exceed the actual cost incurred by the trader.

9.1 What can be charged ✅
Surcharges can only reflect costs directly incurred by the trader for using the payment method in question. For card payments, legitimate surcharges may include:

  • Merchant Service Charge: The fee businesses pay to their payment service provider, which includes the interchange fee paid to the card issuer, the fees paid to the scheme (e.g., Visa or Mastercard), and the margin retained by the payment service provider to cover costs and profit.

  • Transaction/Overhead Fees: Fees paid by the business to intermediaries for merchant services provided by the payment service provider. This is when an intermediary acts as a point of contact for the business, charging a markup on the payment service provider’s fees.

9.2 What can’t be charged ❌
The government specifies that a surcharge cannot include the general costs of running a business, such as administrative overheads, staff training, equipment installation, or setup fees.


💬 Any questions or feedback? There are two ways to get in touch:

Thank you! 🕺

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