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Councils and firms caught out over failures to stop credit card charges days after government outlaws it

Some councils were still accidentally charging for using credit cards days after it was outlawed - Alamy
Some councils were still accidentally charging for using credit cards days after it was outlawed - Alamy

Councils and businesses are continuing to charge consumers for credit card payments after a new law outlawing the practice came into effect on Saturday, it has emerged.

Councils including Lambeth and Isle of Anglesey, and a range of businesses were wrongly charging cardholders for payments over the weekend, MoneySavingExpert.com found. 

Lambeth Council was wrongly charging residents a 1.65 per cent fee after the ban kicked in.

One man who tried to pay his council tax bill on Saturday said: "Lambeth Council told me they no longer charge so I paid by credit card. And guess what - they surcharged me."

A spokesman for the council said that customers should no longer be charged for paying by credit card and added: "We apologise for any initial administrative errors, and will make refunds as appropriate.”

Meanwhile a number of small businesses appear to have misinterpreted the rules and were still charging customers to pay by card. 

Local cab firm Kelvin Kabs, in the Greater Glasgow area in Scotland said it will continue to charge a 50p "service fee" to customers who pay by card, which does not apply to cash payers. 

Credit card
Credit card

When asked to explain why it was still charging despite the change, the manager said it was a "service" fee not a "transaction" fee and added: "It's a slight grey area - customer are welcome to pay by cash if they don't want that service."

And East London Energy, a small green energy provider, has admitted it has continued to charge customers a 1 per cent fee for paying bills by credit card after the ban came in. 

East London Energy has now stopped charging the fee and said it would refund those who were wrongly charged. 

Meanwhile a number of other businesses including Premier Inn and the Student Loans Company have forgotten to change their websites and are still warning card holders they will be charged. 

On January 13 councils and firms were banned from and ­government bodies when people pay by credit card – ostensibly to off-set charges paid to card companies – will be ­prohibited.

In the week leading up to the ban The Telegraph revealed that some retailers and other companies were planning measures to “sneak” around the rules by refusing credit card payments; increasing shelf prices and introducing new “service charges” across the board.

Even those paying cash will now lose out, as some companies – including food delivery firm Just Eat – are applying the cost increases to all customers.

Consumer experts have called for regulatory enforcement to ensure businesses cannot dodge the rules.

Previously many councils, travel firms and shops charge customers paying by credit card as much as 3 per cent of their purchase. This was despite the fact that the true cost to businesses of letting customers pay by credit cards is a fraction of this price.

So-called “Interchange fees”, which retailers pay payment ­providers, were capped at 0.3 per cent by an EU ruling in December 2015.