An EU consumer protection directive designed to ensure payment charges are not used as an additional revenue source by traders but must reflect the real cost of processing the transaction, must be transposed into Irish law by Dec 13, and must be applied from Jun 13, 2014.
Government officials claim the average service charge for small businesses in Ireland for credit card transactions is between 1.5% and 2.5% of the total charge, and 15c-50c for Laser and other debit card transactions. It is believed large businesses pay even lower rates.
The new legislation will also oblige traders to seek the express consent of consumers for any extra payments in addition to the main transaction. In effect, it will prohibit opt-out tick boxes on websites which consumers have to reject in order to avoid additional payments such as insurance.
The rules will be enforced by the National Consumer Agency. It will be empowered to take either civil or criminal proceedings against any trader alleged to be in breach of the legislation.
The measures are seen as a response to the use of payment surcharges by sectors, including airlines, concert tickets, package travel and utility companies in order to lower the headline price of goods or services rather than increasing overall revenues.
The European Commission, EU governments and consumer groups have expressed concern that handling fees have increased substantially in recent years, despite no evidence the cost of processing card payments has risen significantly.
However, Enterprise Minister Richard Bruton’s plan to introduce such measures have missed their original deadline.
He promised last year that measures to improve consumer rights regarding fees imposed for the use of debit and credit cards would be in place by the end of 2012.
However, a spokesperson for Mr Bruton admitted yesterday that the department had been forced to seek further legal advice from the European Commission and the Attorney General as a result of an issue which emerged during a consultation process last autumn.
It is understood credit card-issuing companies have made last-minute attempts to have some of the proposed measures changed at both national and EU level.
The spokesperson said Mr Bruton still intended to introduce such legislation in early 2013.
Examples of such increases include those such as Ryanair’s administration fee, which has risen from €2.50 in 2006 to €6 today, while the Aer Lingus charge for handling credit card payments was €3 in 2008 compared with €6 now.
The Consumers’ Association of Ireland said the proposed changes were “critically important” due to continuing strong growth in online shopping.
“Handling charges were often used as a licence to print money which caused immense frustration for consumers,” said chief executive Dermott Jewell.
While the association said the legislation was unlikely to lead to cheaper prices, Mr Jewell said it would allow consumers make more informed buying decisions.