The Payment Services Regulations 2017 (Regulations) came into force earlier this year, which prohibit a discount being given on certain kinds of payment methods offered by a trader to a consumer. A number of Cambridge businesses and organisations do not appear to be aware of these Regulations and are potentially operating unlawful payment structures.
The consequences of flouting the Regulations can be severe, since failure to comply with an order of the court (if the regulator is ignored and an order obtained) can result in a fine and up to two years’ imprisonment.
The Regulations impose an absolute ban on any surcharge applied, in a consumer contract, where the following types of payment are offered: credit or debit card, online transfer or direct debit (electronic payment).
What this all means is that a trader of any kind cannot offer to a customer who is a consumer a discount on one type of electronic payment, but not another. For instance, a five percent discount if you pay by direct debit, but none if paying by credit card.
It follows that:
- A discount or a surcharge can be offered for payment made by cash, cheque or gift vouchers, as they do not fall within the definition of electronic payment
- If a discount is offered for one form of electronic payment, the same discount must be offered for all other forms of electronic payment
There are one or two forms of payment to which the Regulations do not apply, depending on the circumstances, for example in relation to payment by way of instalments.
The rationale of the Regulations is to increase pan-European competition and participation in the payments industry by entities other than banks, as well as providing for a level playing field by harmonising consumer protection and the rights and obligations of payment providers.
Whilst we remain in the EU, the Regulations will continue to apply (and even upon leaving, the government may choose to implement them), so it is important that businesses in Cambridge ensure that their payment structures are compliant.
Please visit stoneking.co.uk for more details and advice.