End of legal loophole that lets retailers charge more for card use

The commerce ministry is to draw up legislation to close a loophole in the law that allows vendors to charge extra to consumers using credit cards.

The legislation will allow consumers to file a complaint with the consumer protection service and close a contradiction in the law,

Businesses argue that their profit margin on smaller items is low and eaten up by the charges they incur by accepting cards as opposed to cash.

The law that mandates all retailers to accept cards was passed last February. However, since then some businesses have been taking advantage of loopholes to impose the extra charges, Phileleftheros reported.

They argue that the interpretation of the law did not in fact prohibit them from adding on a surcharge when accepting cards.

The law states that in the event a card is used the buyer must be informed about extra charges before the seller initiates the transaction. At the same time, in another section, the law states that “the beneficiary is not allowed to request charges for the use of a specific means of payment”.

Thus, the two articles in the law contradict each other. There was also no mechanism within the law for complaints to be filed on the specific issue and no provision for penalties for offenders, though it does contain a provision for penalties for not accepting cards.

According to Phileleftheros, the consumer protection service has received numerous complaints from the public saying they were being charged extra, or that some retailers were telling them there was a minimum charge for using a cards, forcing them to purchase additional items.

On examining the complaints, the commerce ministry decided the law needed to be amended, the report said and after seeking the advice of the legal service, an amending bill is being prepared.

It is to clarify that the imposition of additional charges is prohibited. The bill is due to go to parliament in March where all stakeholders will be heard during committee hearings.

The report said that in particular the legislation on card usage has been a headache for kiosks where very small purchases are made and as some items such as newspapers, phone cards and cigarettes are fixed, kiosk owners were paying the bank processing charges, which was putting them out of pocket. Kiosks want to be exempt from the law. They say the cost to them for each credit card transaction ranges from 1.2 per cent to 2.5 per cent.

The 2022 law was passed both for reasons of clamping down on tax evasion by retailers and to aid in ushering in the digitisation of the financial system culminating in the digital euro or CBDC. Indeed, observers foresee that to further this agenda in the coming five years, a levy may even be imposed on cash transactions to promote more digital payments, a reversal of the current situation.