Credit and Debit Charges to be Banned for 2018
In the UK, businesses will no longer be allowed to add a surcharge for making card payments. This will take effect in January 2018 and follows a ruling by the EU banning charges on Visa and Mastercard payments. Our government is going a step further and extending this ban to American Express and Paypal too.
This fee is added to reflect the cost of processing payments but has been seen to be as high as 20% and cost consumers £473 million in 2010 alone. Whilst airlines and food takeaway companies are the worst offenders by applying this to every transaction, small traders tend to use this for card payments which fall below a specific sum of say £5 for example.
Local authorities have also been brought to attention with the DVLA applying a flat fee of £2.50 for a card payment. This has led to a huge £42 million in fees since 2012. Large businesses are usually charged approximately 0.6% for credit card transactions and 10p – 20p per debit card.
This is part of a broader aim to increase the family income and reduce the cost of living by the government. Stephen Barclay, economic secretary to the Treasury said “Rip-off charges have no place in a modern Britain and that’s why card charging in Britain is about to come to an end”.
However, to combat the sudden deficit to these businesses, it is expected that prices will rise. The larger retailers are not likely to take such a hit to their income without a plan to recoup their losses.
How will this effect you as a business?