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PSD2 - The new rules for surcharging

We have already talked about what PSD2 is and why we need it - read more on that here. As promised, we are now ready with the second post (of four) about the new Payments Services Directive. This time we will take a closer look at the new rules on surcharging.

What is surcharging?

To understand surcharging, we first need to know the term “interchange fee”. The interchange fee is a fee the acquirer needs to pay to be able to process card payments. The fee is usually paid to the card issuing bank, i.e. the cardholder’s bank.

Acquirers often pass on the interchange fee to their customers, which are online shops. Hence, the interchange fee is part of the price that online shops pay for their acquiring agreement.

Surcharging means passing the interchange fee on to the final customer, that is the cardholder. It has been common practice to let the cardholders pay the fee under the name card fees.

What are the new rules?

The new rules are quite simple - online shops are no longer allowed to surcharge on consumer cards. That is, you can no longer charge a fee of a similar size as the interchange fee, to customers paying with consumer cards - not even if you call it something creative to hide the fact that it is this cost it is supposed to cover.

You are still allowed to surcharge corporate cards, so if you have a B2B shop, you don’t have to change anything.

What can I do to comply with the new rules?

The authorities will keep check of what the online shops are doing - so there’s no point in being creative with shady solutions to the surcharge ban.

Instead, you can do one of three things:

  1. Accept the fees and pay them yourself

  2. Increase the prices of your products or on shipping a bit, and earn back the fee in this way

  3. Only accept corporate cards

What happens if I surcharge a consumer card?

The new rules on surcharging have already come into effect - so hopefully you’ve already made some changes, otherwise you better hurry! There have already been complaints about illegal surcharges on cards, so the authorities are alert.

What the punishment for surcharging consumer cards is is a tricky question. Since PSD2 is a directive, each country can implement the rules into their own legislation as they please - as long as the rules are being followed. The result of this is that each country can have different wording and specification of the rules - and also differing penalties.

Denmark is issuing a warning and later a fine for non-compliant online shops, but other countries may do it differently.

To sum up..

.. the surcharging rules are quite simple. You simply cannot do it on consumer cards. If you want to earn back the fee in some other way, you are free to do so - you just can’t charge it directly to the customer under a different name.

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