Retailers and businesses can no longer charge consumers to pay by credit card for goods or services.

The ban was introduced on the 13th of January 2018 on the back of a widespread piece of EU legislation and has been met with mixed reactions.

Some companies have been found to surcharge consumers up to 3% for paying by credit card despite the fact that the cost to their business for accepting this form of payment is capped at just 0.3%. According to the most recent statistics from the Treasury, the total value of surcharges for debit and credit cards in 2010 alone was an estimated £473 million.

While consumers will no longer be subjected to these excessive fees, it’s likely to affect them negatively in other ways.

Local councils and government agencies have been affected by the ban, including HMRC. As a result, people can no longer use a credit card to pay their tax bill – something which is bound to hit small businesses in particular hard. If this is something you’re worried about, please contact us about our accountancy services and we will be able to advise you about other payment options.

Most small businesses have to cover the costs of processing customer payments by credit or debit card, which can run into hundreds of pounds a month. Monthly fees involved with processing card payments include hire of the card machine, merchant service charges, minimum monthly service charges and chargeback fees.

While larger businesses should find it easier to absorb any loss of revenue, smaller firms seem more likely to adopt more drastic measures in a bid to circumvent the legislation. In order to cope with this, retailers are considering introducing a range of new measures such as new service charges, increasing shelf prices or refusing to accept credit card payments altogether.

Chairman of the FSB, Mike Cherry commented:

“Businesses often only pass on a fraction of the total cost of processing card payments to their customers. Interchange fees are only the start of the costs that small firms have to absorb when they process a card payment.”

He continued:

“They also have to foot the bill for compliance, set-up, authorisation fees and payment system operating costs. What we should be seeing is businesses and the government working together to bring down the costs to firms of processing card payments.”

Please note that this new regulation means that HMRC will no longer be accepting credit cards for tax payments. More information can be found about this on our blog.

We can help manage your business costs.

If you would like more information about this topic, please contact PKB about our accountancy services and we will be more than happy to help.


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