New Government guidelines aim to combat excessive booking fees

Tina Hart

A new set of guidelines has been introduced by Government alongside regulations to combat excessive booking fees in relation to particular payment methods.

On April 6, a new set of Consumer Protection Payment Surcharge Regulations was brought in declaring it ‘unlawful for businesses to charge consumers fees for using a particular payment method that are higher than the costs to the trader of accepting that payment method’.

The Department for Business, Innovation and Skills (BIS) has outlined the details of what constitutes as reasonable trader costs claimed with regards to the new rules. It explained the differences between ‘direct’ and ‘indirect’ costs, with the latter not eligible as a cost to be considered in the pricing of consumer fees.

The guidlines dictate: "A cost which is too indirect, such that an equivalent cost would have been incurred anyway for other means of payment, cannot properly be characterised as a cost ‘for’ the use of the relevant means of payment.

"The Department does not consider that indirect costs, such as general administrative overheads or staff training, should be included in the calculation of costs borne by the trader. Indirect costs should be reflected in the headline price of goods and services, as they ought to be for any general cost categories."

"Operating costs could be included only where they can be shown to result directly from processing the method of payments; in such cases, the appropriate cost would likely be the marginal cost."

Direct costs for the trader include merchant service charges incurred for the processing of a particular payment as well as IT costs for equipment used at the point of sale. Costs incurred by risk management such as fraud prevention can also be considered a direct cost as well as the cost of "reversing or refunding payment".

Source: Register / Out-Law.com


Tags: Government, booking fees, fees, BIS, department for Business Innovation and Skills

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