Reader Question: Credit Card Fees Banned in European Union?

Credit Card Surcharges Banned in European Union


Traveling in Europe? Credit Card Surcharges in the EU Have Been Banned since January 13, 2018, so for EU citizens, there shouldn't be unpleasant surprises when paying with a Visa or MasterCard, at least not on account of your payment method. I was reminded of this when a foodie client from the UK, who will be traveling to Denmark this summer, recently emailed me “I'm looking forward to dining at some of Copenhagen's Michelin star restaurants, but am concerned that on some of the restaurant Web sites, it notes that non-EU cards will be subject to a fee. I assume that since the UK hasn't yet left the EU this applies to me, and there will be no surcharge on my Visa?”

Merchants haven't changed their practice of charging 2-3% or more for using credit cards out of generosity; the impetus is European Payment Services Directive (PSD2), which, as part of its goal of further integrating the European Union's payment market, enhances consumer rights, requiring the removal or credit card surcharges for payment with a consumer credit or debit card (MasterCard or Visa card only).

The short answer, for this client, is that he will be able to pay with his UK card and not be subject to any surcharges for his Michelin-star dining in Denmark. That said, a U.S. client with a U.S. issued credit card would be. Read on for more details.


Does the Ban on Credit Card Surcharges Apply to All Cards?

Sadly, no: EU companies are only banned from charging a credit card surcharge to clients who are paying with an EU-issued credit card. Americans paying with U.S. issued credit cards, and anyone paying with a non-EU issued credit card, legally may be forced to pay a surcharge for paying with a non-EU credit card. That said, the fee must correspond to what it actually costs to process the card, so it shouldn't be more than 2-3% of the transaction.

The ban on credit card surcharges also does NOT apply to business credit cards, even if they are issued by an EU institution.


Is the UK Included? How About After Brexit?

As the EU Directive has already become UK law, having been approved by parliament, it will also remain UK law after Brexit in spring 2019, unless repealed. Plus, the UK law includes in its surcharge ban AMEX, PayPal and Apple Pay, which are not included in the EU Directive.


Are All Surcharges Banned?

No; an EU company can still have an administrative surcharge that applies to all customers. But it can't have a surcharge that is only applicable to credit card payments, where the credit card is a consumer Visa or MasterCard issued by an EU institution.


Is There Any Way for U.S. Travelers to Avoid Credit Card Surcharges or Compensate for Them?

Unfortunately, as mentioned above, this EU Directive doesn't apply to credit cards issued outside the EU. So if a U.S. traveler wants to avoid credit card surcharges or compensate for them, the best options are:

  • Don't patronize a business that imposes a surcharge on non-EU credit cards. In the case of restaurants, typically hotel restaurants allow you to bill the meal to your room, and the hotel will not charge fees for using your foreign credit card
  • Use an ATM card that rebates foreign ATM fees (our bank, First Republic, does this) to withdraw cash, and pay cash to avoid credit card surcharges
  • Eat the surcharges but pay with the Chase Sapphire Reserve, which earns 3X Ultimate Rewards points per dollar spent on all travel and dining, and doesn't charge foreign transaction fees. Ideally, you're redeeming Ultimate Rewards for more than 2 cents per point, so that's at least 6 cents of value per dollar spent on travel and dining, vs. the 2-3 cents per dollar you're being charged as a credit card surcharge.


Have you been charged a credit card surcharge in Europe? Which country and what type of business charged it?

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