The Treasury has confirmed to Letting Agent Today that the ban on credit card surcharges which came into effect in recent days does apply to letting agencies that have so-called ‘plastic transactions’ with individual landlords and tenants.
This includes rent payments made by card.
Some agencies had approached LAT suggesting that there was a lack of clarity over some aspects of how the EU’s European Payment Services Directive may apply; the surcharge ban is an EU policy which applies to the UK irrespective of this country’s Brexit process.
Under previous consumer legislation, companies - including letting agencies dealing with individual landlord and tenant clients - could levy a surcharge so long as it reflected their cost in processing the debit or credit card payment.
Since the weekend, however, all UK companies selling to UK-based consumers should abide by the new EU regulations, which applies to face-to-face, online and telephone transactions, and which also applies to e-money transactions using PayPal, Apple Pay and similar services.
One agency with numerous branches has told LAT it could face additional costs of as much as £1,000 per month because of the move.
However, the ban does not include the handling of corporate debit and credit cards issued to company employees for business expenditure.
Under the EU regulation, the ban on surcharges applies only to transactions between companies and individual consumers so surcharges to other businesses are permitted - this could, for example, include companies set up as ownership vehicles for buy to let properties and which then engage letting agencies to manage the portfolio.
However, the surcharge in such cases must not exceed the fee charged to the firm levying the surcharge.
A statement from the government says the new rules will be enforced by Trading Standards departments which have the power to take civil enforcement action against traders who breach the regulations.
“It will also entitle customers to receive a refund of any unlawful surcharge they have paid and enable them, if necessary, to take legal action to recover any such surcharge” says the statement.
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My issue with this is new legislation is that, whereas a retailer of goods can simply increase list price to cover card service costs, an agent cannot.
Take a ‘rent collection’ service, for example. 20% of my fee to the landlord will be to account for card payment charges.
We are now insisting on payment by bank transfer/standing order and card machine will be heading back to our provider.
BTW we only charged a flat 1% for card transactions - hardly excessive and tenants had the option to pay via bank transfer if they wished.
With you on that one Robert. Had to have that conversation yesterday with a student tenant wanting to pay a quartely rent (£1170.00) by credit card. Seemed happy enough to pay via bank transfer though. Looks like we may no longer have use for our card machine.
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