Posts Surcharge Facilities

Fri 24 November 2017

The directive - known as the Payment Services Directive (PSD2) - will make it illegal for any business to charge extra for using a debit or credit card in the EU from January 2018.  This directive has already been incorporated into UK law, following a vote in parliament in March. It will therefore remain law after March 2019, when the UK leaves the EU.

In the Channel Islands, Jersey has only enacted part of the provisions under Payment Services Directive (PSD1) but we understand that there are no current plans to implement in Jersey legislation equivalent to the part of PSD2 that bans card surcharging.

In 2015, the States of Jersey Assembly enacted the EU Legislation (Payment Services – SEPA) (Jersey) Regulations 2015 (the “2015 Regulations”).  Those Regulations implemented in Jersey provisions that are equivalent to Titles III and IV of the original Payment Services Directive (“PSD1”).  However, those Regulations only apply to credit transfer or direct debit payments made in Euro by Jersey banks using the payment schemes developed by the European Payments Council. The 2015 Regulations do not cover card-based payments.

We further understand that there are plans to update the 2015 Regulations to take account of how PSD2 amends PSD1 but only to the extent that the changes impact credit transfer or direct debit payments made in Euros by Jersey banks using the payment schemes developed by the European Payments Council.  However, card payments are not in the scope of that work, so the surcharge issue is not something that the JFSC has formulated a view on at this point.

We therefore strongly advise all Clients in England, Wales, Scotland and Ireland to remove all surcharging facilities by the required date.  All other jurisdictions, including the Channel Islands should remove all card surcharging by January 2018 unless they have confirmation from their existing acquiring bank or independent legal advice that they can continue to apply a surcharge which reflects the costs of accepting card transaction. 

Merchants can however, subject to their merchant agreement with their Acquirer, consider the following:

* apply a minimum charge on credit or debit,

* decide to only accept debit cards,

* decide to only accept non-commercial cards given the significant charging difference.

As you can appreciate CityPay is not in a position to offer legal advice to its clients.  The above is therefore only our interpretation of the regulatory framework as we see it, but strongly suggest that clients that wished to continue to apply a surcharge after Jan 2018 seek legal advice on this matter. 

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