Card payments are now the norm for many businesses, but the convenience they offer often comes with a cost. Processing fees can quietly eat into margins, especially for businesses with high transaction volumes or low average transaction values.
Some businesses consider surcharges, which means passing part or all of the card processing fee on to the customer. While this can be a useful tool, it’s important to understand how surcharging works and when it’s actually allowed.
What Are Card Surcharges?
Card surcharging is the practice of adding an extra fee to a transaction when a customer chooses to pay by card. This surcharge is intended to cover the cost charged by the card provider and payment processor for handling the transaction. In practice, it usually appears as a small percentage added to the total bill or a clearly labelled card payment fee at the point of sale.
The idea behind surcharging is straightforward. Instead of absorbing card fees as a business expense, the cost is shared more transparently with the customer who chooses that payment method, but when is it allowed?
Is Surcharging Legal in the UK?
In the UK, surcharges are not permitted for consumer card payments. Since January 2018, businesses have been banned from adding extra charges for payments made with most consumer debit and credit cards, including Visa and Mastercard. This rule applies whether the payment is made in person, online, or over the phone.
The aim of the ban is to protect consumers from unexpected fees and to make pricing clearer and fairer. If a customer is using a personal debit or credit card, you must charge the same price regardless of how they pay. Despite the ban, many retailers have been found guilty of charging customers illegally.
When Can Businesses Still Pass On Fees?
Although consumer card surcharges are banned, there are still limited situations where passing on fees may be allowed. Payments made using commercial or corporate cards, which are typically issued to businesses rather than individuals, are not always covered by the same restrictions. In these cases, a surcharge may be permitted, provided it reflects the actual cost of processing the payment and is communicated clearly in advance.
It’s also worth noting that some businesses choose alternative approaches instead of surcharging. These can include offering discounts for cash or bank transfer payments, as long as the advertised price is clear and customers are not penalised for choosing a standard card payment.
Transparency Is Essential
Whether surcharges are permitted or not, transparency is crucial. Any pricing structure you use should be clear, consistent, and easy for customers to understand. Hidden fees or unclear signage can quickly lead to complaints, reputational damage, or even regulatory issues.
For businesses that work with commercial clients or operate in sectors where corporate cards are common, it’s especially important to check the specific card rules and ensure your approach is fully compliant.
For many businesses, the real opportunity lies not in surcharging, but in reducing the underlying cost of card payments. Lower transaction fees, better pricing structures, and a payment setup tailored to how your business actually trades can often deliver savings without changing the customer experience at all.
At BMS, we help businesses understand their card costs and explore smarter, compliant ways to reduce them. If you’re unsure whether surcharging applies to your business, or you want to explore alternatives that protect both your margins and your customer relationships, getting the right advice makes all the difference. Get in touch with our expert team today.
