Where UK Merchants Can and Cannot Recover Card Costs in 2026

The rule that matters most

Since 13 January 2018, UK traders have been prohibited from adding a surcharge when a consumer pays by debit or credit card. The prohibition was introduced through the Payment Services Regulations 2017 and sits alongside the Consumer Rights (Payment Surcharges) Regulations 2012. In practice, it means a consumer cannot be charged more simply because they chose to pay by card rather than by cash or bank transfer.

The ban is often described as a 'card surcharge ban', but its scope is wider than the label suggests. It covers credit cards, debit cards and prepaid cards, and it applies to online and in-person payments. It does not, however, apply to commercial cards issued to businesses, nor to payments where the payer is acting in a business capacity. That distinction is where most compliance questions arise.

Consumer cards versus commercial cards

The legal test is not the type of card alone; it is the capacity in which the payer is acting. A payment made by an individual for personal use is a consumer payment, even if the card is a premium credit card or a debit card linked to a business account. A payment made by a limited company, partnership or sole trader for business supplies is a commercial payment, even if the card is a personal credit card. In practice, merchants should treat personal cards used by individuals as consumer payments unless there is clear evidence to the contrary.

For commercial card payments, surcharging remains lawful in principle. A merchant may pass on the cost of acceptance, provided the charge is transparent, disclosed before the payment is made, and does not exceed the actual cost incurred. That last point is important: a flat 2% 'card fee' applied to every commercial card transaction is unlikely to reflect the underlying cost for debit cards and may be difficult to defend if challenged. Acquirer rules and scheme rules also apply, and some contracts prohibit surcharging altogether.

Surcharge or service fee? The substance test

A genuine service fee is charged for a service provided to all customers, regardless of how they pay. A booking fee, for example, may cover administration or delivery and may be charged whether the customer pays by card, cash or bank transfer. If the fee is waived for non-card payments, or if it varies according to the card used, it is likely to be a surcharge in substance, whatever it is called.

The same logic applies online. A 'processing fee' added at checkout only when a consumer selects card payment is a surcharge. A 'convenience fee' applied only to card transactions is also likely to be caught. The label on the invoice does not determine the legal position; the trigger for the charge does.

Common compliance pitfalls

• Applying a fee to consumer debit cards. The ban covers debit cards as well as credit cards. A fee that is small enough to seem harmless is still prohibited.
• Hiding the charge in the headline price. A merchant may build card costs into its prices, but it cannot describe the price as including a card surcharge. Transparency is part of the compliance requirement.
• Surcharging commercial cards without disclosure. A commercial card surcharge must be shown before the transaction is completed and must be reflected in the terms of business.
• Treating a gateway fee as a surcharge. Passing on a gateway or platform fee as a separate card charge can be a surcharge if it is triggered by card use. If the fee applies to all payment methods, it is more likely to be a genuine service fee.
• Ignoring VAT. A surcharge or service fee is part of the consideration for the supply and is subject to VAT at the same rate as the underlying goods or services. It should be included in the VAT calculation and shown correctly on the invoice.

A simple decision tree

1. Who is paying? If the payer is a consumer acting for personal purposes, do not add a card surcharge.
2. Is the payer a business? If yes, a commercial card surcharge may be permissible, but only if it is disclosed and cost-based.
3. Is the charge triggered by card use? If the charge applies only when a card is used, treat it as a surcharge. If it applies to all payment methods, it may be a service fee.
4. Does the charge exceed your cost? For commercial cards, calculate the actual cost of acceptance, including merchant service charges and any gateway fees. Do not apply a blanket percentage without checking.
5. Is it disclosed? Show the charge clearly before payment and include it in your terms. Do not add it at the final step without warning.

What to do next

Review your checkout flow, your terms of business and your card terminal prompts. If you operate a mixed consumer and business customer base, separate the two payment journeys where possible. Keep a record of how any commercial card surcharge is calculated, and review it annually against your acquiring statement. If you are unsure whether a fee is a surcharge or a service fee, assume it is a surcharge until you can demonstrate otherwise.