Feeds

New rules to end cries of 'WTF... a £10 online booking fee?'

Excessive charges: Hopefully something to tell your grandchildren about

Next gen security for virtualised datacentres

The government has issued guidance that sets out the kind of costs businesses incur that they are legitimately able to claim back through payment surcharging.

Under the Consumer Protection (Payment Surcharges) Regulations, which took effect on 6 April, businesses are prohibited from charging consumers excessive fees for using a credit card or other means of payment.

Under the regulations, businesses will be allowed to impose surcharges for the use of particular forms of payment but the amount of that charge cannot exceed the "costs borne by the trader" for facilitating the use of customers' means of payment.

The Department for Business, Innovation and Skills (BIS) has now explained in more detail what "costs borne by the trader" are permitted to levied as part of a payment surcharge (16-page/167KB PDF).

In new guidance it said that the "size and nature" of those costs were likely to vary depending on what kind of business is involved, what means of payment is used as well as "the contractual arrangements on which the business relies to use those means". In addition it said that factors such as businesses' turnover, what sector they operate in as well as "other characteristics of the trader" including their size and related bargaining power in the payments industry could also influence the extent of costs businesses could legitimately claim back under the terms of the Regulations.

However, BIS made clear that only "direct costs" incurred by traders which are "exclusively attributable to using a particular means of payment" could be claimed back via a payment surcharge levied on consumers.

"A cost which is too indirect, such that an equivalent cost would have been incurred anyway for other means of payment, cannot properly be characterised as a cost ‘for’ the use of the relevant means of payment," BIS said in its guidance. "The Department does not consider that indirect costs, such as general administrative overheads or staff training, should be included in the calculation of costs borne by the trader. Indirect costs should be reflected in the headline price of goods and services, as they ought to be for any general cost categories."

"Operating costs could be included only where they can be shown to result directly from processing the method of payments; in such cases, the appropriate cost would likely be the marginal cost," it added.

BIS said that businesses could legitimately claim back direct costs attributed to facilitating consumers' card payments such as the merchant service charge they pay to banks, as well as the "IT and equipment costs used for particular means of payment such as card terminals, for example point of sale devices".

In addition costs incurred in "risk management", such as fraud detection and prevention measures, as well as costs incurred in "reversing or refunding a payment" will also be able to be accounted for in a surcharge, it said.

BIS also said that businesses that incur "operational costs" in relation to "activities dedicated exclusively to card payments", such as by buying equipment, fraud detection and processing services for card payments from intermediaries, "should be able to recover the costs they incur through a payment surcharge". It said that businesses could show that these direct costs have been incurred by retaining invoices.

However, the department also explained what indirect costs businesses could not reclaim via a surcharge.

"Indirect costs which cannot be separately identified as being attributable to the use of cards should not be included; this would most likely include such things as website management, staff training, utility bills and other general overheads that would be incurred even if card payments were not taken," BIS said.

Businesses will be able to offer discounts to consumers for electing to make payments using specific means, but must ensure that the discount on offer "reflects the cost savings for the trader, and the additional amounts payable by consumers using other means of payment reflect the additional cost borne by the trader for the use of these other means".

Copyright © 2013, Out-Law.com

Out-Law.com is part of international law firm Pinsent Masons.

The essential guide to IT transformation

More from The Register

next story
GCHQ protesters stick it to British spooks ... by drinking urine
Activists told NOT to snap pics of staff at the concrete doughnut
Britain's housing crisis: What are we going to do about it?
Rent control: Better than bombs at destroying housing
What do you mean, I have to POST a PHYSICAL CHEQUE to get my gun licence?
Stop bitching about firearms fees - we need computerisation
Top beak: UK privacy law may be reconsidered because of social media
Rise of Twitter etc creates 'enormous challenges'
Redmond resists order to hand over overseas email
Court wanted peek as related to US investigation
Ex US cybersecurity czar guilty in child sex abuse website case
Health and Human Services IT security chief headed online to share vile images
NZ Justice Minister scalped as hacker leaks emails
Grab your popcorn: Subterfuge and slur disrupts election run up
We need less U.S. in our WWW – Euro digital chief Steelie Neelie
EC moves to shift status quo at Internet Governance Forum
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?