Credit Card Payment using Debit Card

Payment by credit card with debit card

Prohibition of surcharges for card payment Currently charging consumer supplements for payment by certain payment means (usually credit or debit cards) is contrary to the Act of 13 January 2018. Currently, merchants are permitted to invoice extra charges to clients for certain payment means, provided that they only transfer the company's overhead.

It is the latest in a long line of initiatives to enhance account and credit card visibility and equity. The European Interbank Fees Ordinance introduced upper limits for interbank trading in 2015, i.e. the amount that the card accepting operator (acquirer) of a card dealer pays to the cardissuer of a customer for each payment process.

The buyer returns this to the trader as part of the merchandise service charge (together with handling charges, terminals charges, etc.), which is directly agreed between the buyer and the trader. Inconsistencies have persisted between EU Member States since 2015 as to whether traders can charge exchange charges to their clients.

This is forbidden in some jurisdictions, while it is not in others, and in some jurisdictions dealers benefit from supplements. The amendment follows from the second Payment Services Directive transposed in the United Kingdom in the Payment Services Regulations 2017, but the Government has chosen to widen the prohibition beyond credit and debit card to all kinds of bulk payment instrument (including those under triple card schemes).

In particular, where both a trader and the customer are established in the European Economic Area (EEA), the levying of charges on the following items is prohibited: credit or debit card payment (or any other device), credit transfer and debit. This prohibition does not cover the withdrawal of money from automated teller machines (ATMs), the use of "commercial cards" (e.g. company credit cards) or payment means intended exclusively for the payment of commission.

For example, this means that retailers may still charge additional fees for card operations if the card was spent to an employee or partner or to a self-employed person only for commercial purposes (and if the transaction made with these card is directly debited to the respective enterprise, firm or institution).

Such a supplement may not, however, be higher than the costs of handling the payment. Where only one of the merchants or the merchants' client is established in the EEA, a supplement may be levied, but may not be higher than the costs paid by the merchants for the use of this particular payment means.

Is it forbidden to spend a certain amount on a card or other payment instrument? Those in charge of trade standards at LAs are in charge of replying to grievances about companies that have continued to charge card supplements after 13 January 2018. Companies levying additional charges must act before 13 January 2018. Companies, in particular, must make decisions on how to deal with current and new clients.

New customer practice will be relatively easy to articulate and apply, but dealing with current clients will require closer scrutiny as there are more problems to consider.

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