The EU second Payment Services Directive (PSDII) was approved by the European Parliament and European Council in December 2015 and seeks to widen the scope of the existing EU Payment Service Directive (PSD) that defines the information that consumers and businesses must receive when making payments. This includes making reforms to the way payments by debit and credit cards, direct debit, credit transfers, standing orders and other digital payments are transacted. 

The UK government is required to implement the PSDII into UK law by 13 January 2018 to meet its legal obligations and avoid the risk of facing infraction proceedings. This work must still be completed as for the time being the UK remains a full member of the EU.

One of the main changes that will come about as a result of this new legislation will be the removal of extra charges for making payments by credit cards. This practice known as ‘surcharging’ is common across a wide range of businesses including some local councils and government agencies. These new rules will bring an end to the practice entirely.

Planning note:

Most of HMRC’s credit card fees were sharply reduced with effect from 1 April 2016. Since then the credit card fees have varied depending on the type of card used and whether it is a corporate or personal credit card. The lowest fees are for personal Visa or MasterCard credit cards and the highest fees are reserved for corporate credit cards.

From January 2018, HMRC will no longer be able to levy any fees for payment by credit card. As HMRC incurs a fee for processing payments by credit card there is a possibility that the option to make payments of tax by credit card may be removed.