When you pay for something on a credit card, whether online or in a shop, some retailers may charge you extra for paying this way.
This additional fee is called a surcharge. Some shops may charge you whether you’re paying by debit or credit card, but if you’re paying for something online, it’s more likely you’ll come across a surcharge if you pay by credit card rather than debit.
Covering the cost of processing a card payment
Any time you pay for something with a credit or debit card, the retailer has to pay a small percentage to the card company.
If you’re buying something from a large company, perhaps a chain store like a supermarket, it’s unlikely you’ll have to pay a credit card surcharge.
This is because the profits these businesses make are much larger than an independently run shop, so the card processing fee impacts their profits less.
It’s more common to face a surcharge in smaller independent shops than big chains, as the cost to process card payments will eat into their profits more. As they’ll generally make much less money and have less to fall back on, the processing fee might be money that they can’t afford to lose.
That’s why you might have to pay a surcharge for using your credit or debit card in local shops or small retailers.
Making online purchases
It used to be more common to be charged for using either a credit or debit card when buying something online.
These days, after pressure from notable groups like the Office of Fair Trading and Which?, it’s unlikely you’ll be charged for paying by debit card when buying something online. This is because you don’t have the option to pay by cash.
On the other hand, it’s not unheard of to have to pay a charge if you want to buy something using your credit card. It tends to be more expensive for retailers to process credit card payments, so you may find you’re charged to pay this way.
Just how much you have to pay depends on the retailer, but it can sometimes be a percentage of the amount you spend. It may be more common when purchasing things like flights.
Being open and transparent
From April 2013, the law was changed making it unlawful for retailers to apply a surcharge that is far more expensive than it costs them to process.
If you’re buying something online, the retailer should let you know that they charge for certain types of payment.
But if you’re buying something in a shop, the retailer must tell you if there’s a surcharge for using your credit or debit card. You might be familiar with being asked whether you’re happy to pay a charge for using your debit or credit card in a small corner shop. The charge is often around 50p.
Some retailers will have a notice in the window or behind the counter letting you know that they charge for credit or debit payments.