I made a down payment for a car by credit card, and was charged 3% of
the payment for using the card. Is this legal in the UK?

Hi 3penny,

The 3% that you were charged is known as a "surcharge" and is an
optional fee added-on by some merchants to recover the cost they are
charged by credit card companies for making the transaction. UK
merchants have a legal right to add the surcharge to bills for
domestic transactions.

"...UK retailers have the option of surcharging for the use of credit
cards. In practice few do as it may drive customers elsewhere.
However, where credit cards are the best payment mechanism ? such as
over the internet ? or where a company has a near monopoly ? such as
Qantas in Australia ? it is not unusual to be charged extra for using
a credit card. PC World is one of the few conventional retailers in
the UK to make a charge for using a credit card. Paul Lucraft,
MasterCard?s general manager, Northern Europe, says: ?The merchants
are free to surcharge customers to recover any additional cost, but
most choose not to do so. The merchants also benefit hugely by taking
away their fraud and default risk. They also benefit from the
interest-free period as settlement is normally within one or two days
? without it they would get paid maybe 25 to 30 days later.?
http://www.financialworld.co.uk/mag.pdf/oct03/p40-45Interc.nge_FWOct03.pdf

Here are two examples:

Does it cost me any extra?
"No - if you pay using a Debit Card.  If you are paying a bill of
£200, your card will be charged £200.
Yes - if you pay using a Credit Card.  You will be asked to pay a
surcharge of 2.6%, i.e. if you are paying a bill of £200, your card
will be charged a total of £205.20.
The Council does not make any money from this surcharge, it is simply
recovering the handling cost of the transaction, which is made by our
partners providing the electronic money taking service.
The Council feel that it would be unfair for Council Tax payers to
shoulder the burden of cost for these transactions and has therefore
decided to pass on those charges to those who wish to use the Credit
Card facility.
Paying by a valid debit card does not incur a surcharge."
 http://www.tamworth.gov.uk/content/pay%20online%20home

Credit Card Surcharges
"It is legal to charge customers a surcharge for using a credit card
to settle their bill. If you do this you must make the fact clearly
known by:
- displaying a notice near each public door and at your reception area
- telling customers on the phone before they commit themselves and book
- including the information in your advertisements.
If your normal prices are in cash, the information will be, for example:
Credit Cards: surcharge 2%
or
Credit Cards: £1 surcharge
If your prices are normally shown as credit card prices, this
information should be clear. You
would then probably show a discount for cash. e.g.:
Double Room £44.50 per night (credit cards) 4% discount for cash"
http://www.walsall.gov.uk/business/tradingstandards/pdf/business/hotels_guesthouses.pdf

I hope this helps. If you have any questions, please post a
clarification request *before* closing/rating my answer and I'll be
happy to reply.

Thank you,
hummer

Google Search Terms Used:

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Thank you for your clear and full answer.