Abu Dhabi/Dubai: UAE Central Bank rules and regulations prohibit businesses from charge consumers a fee for using credit or debit cards to pay for goods or services, a senior official told Gulf News on Wednesday.

A group of banks in the UAE is authorised to provide credit or debit card payment service called ‘point-of-sale machines’ to businesses [merchants] selling goods and services, the senior official at the UAE Central Bank, said the official who declined to be named.

The banks are then authorised to collect a small fee from the merchants for this service, which may go up to a maximum of two per cent of total value of goods and services.

However, the central bank rules strictly prohibit merchants from passing along that fee to customers, he said.

The merchant is a beneficiary in this transaction because by offering credit card payment service, the business attracts additional business.

“The service benefits the merchants short term and long term; that’s why they are not permitted to charge any fee from the customers,” the official explained.

The comments fall after earlier this week, GEMS announced that its schools will no longer accept credit cards and debit cards as a method of paying fees as of July 1. GEMS said parents who still want to continue paying using credit and debit cards can do so but they will have to cover the bank transaction fee themselves. Parents who carry a GEMS-NBAD credit card have the sole option of paying the fees using these credit cards without being charged the bank fee.

When contacted by Gulf News on Wednesday, a GEMS spokesperson said they were unable to comment in time for deadline.

On Tuesday, GEMS said that every “year, millions of dirhams in tuition fees go towards paying credit card transaction fees charged by banks; we believe those sums are better used in educating our students. Parents have several means of paying that incur no fee at all, and we encourage them to choose the method that is best for them.”

Dr Hashem Allvaiy, Director of Consumer Protection at the Ministry of Economy told Gulf News on Wednesday that “business owners are not allowed to impose these fees, it is not allowed.”

Allvaiy said that parents can can complain about the extra GEMS fee to the consumer protection department at the ministry.