Corporate & Commercial
Plastic fantastic? A guide for businesses on the new rules for card paymentAugust 16, 2017
The government has announced that from January 2018, businesses will no longer be able to charge consumers a fee for paying by credit or debit card.
You can currently be charged for making payments by credit or debit card for goods and services including flights, food delivery, as well as payments made through PayPal, with some charges being an additional 2-3% of the transaction value. It is anticipated that this change will outlaw all such additional fees.
This is great news for consumers making purchases, as more and more payments are being made by credit or debit card particularly with the popularity of online shopping. This will mean that payments will be more straightforward and there will be no hidden additional charges when making purchases.
But what does this mean for my business?
If you are a business owner, you may decide to increase the price of your goods or services to cover this cost to your business, as you will no longer be able to pass on the additional charge to the consumer. However, this will make the advertised rate of your goods or services higher and may put customers off. Remember - under consumer law, businesses are currently only allowed to charge an additional sum that reflects their own costs in processing the transaction. The increase must not be overly inflated and should only reflect the additional cost to your business from the payment provider.
Currently some businesses set a minimum spend before accepting payment by credit or debit card. Under this change in the law, this will still be legal. However, particularly if this is something you newly introduce, you will need to be aware of the potential loss of business with customers choosing to go elsewhere to other businesses which do not stipulate such a minimum.
Your terms of business to your customers may need to be updated to reflect the change in the law and any further changes to your payment terms which you want to implement.
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