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Debit & Credit Card charges now illegal
I thought I would start a thread basically to highlight to those that do not already know the recent law changes on Credit & Debit Surcharges. By that i mean the small percentage transaction fee we add to cover the handling fees of the card company. I say small loosely, because these charges add up and can be anything but small dependant on value of the goods. However, from what i have read so far, this does NOT apply with regards to "Business Cards" I hope! :awkward:
The blunt of it is, we must now swallow this cost ourselves and come up with an alternative method of recouping the loss!
examples of this could be:
* Stop accepting credit and debit cards.
* Raise the price of your quotes/products to cover the fee.
* Apply "your own" service charge for all invoices. (which is allowed) But must apply for everything, Cards, Cheques, Cash.If between the 13th of January 2018 and now, You have charged customers a fee. The customer CAN request it to be refunded, which you have a legal right to do so.
Anyway, I just wanted to highlight this new law in the off chance some of us are unaware of it.
Would be interesting to hear your views on it also?quote :QUOTE:
Companies may charge new service fees to ALL customers. Firms can do this as long as the fees apply no matter which method of payment you use.quote :QUOTE:
From Saturday 13 January all surcharges for paying via credit or debit card will be banned – this includes payment methods linked to your card, such as PayPal or Apple Pay. Companies are still allowed to levy a surcharge if you opt to pay by cash or cheque.quote :QUOTE:
the Federation of Small Businesses has warned "many small firms will struggle to absorb the costs associated with card payments".quote :QUOTE:
HMRC has said it will no longer allow people to settle their tax bill with a personal credit card – which it used to allow for a 0.5% fee. It will continue to accept debit cards, as well as direct debits and bank transfers.quote :QUOTE:
The new law only applies to consumers and so businesses CAN still be charged fees, but as is the case currently, this should only be the amount it costs to process the transaction.
The surcharge rules are based on how you pay not who you are, though. So if you pay with a business credit card you can be charged extra, but if you’re a business owner using your personal credit credit you can’t be charged the surcharge. -
17 Replies
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A classic case of government meddling going too far. They even had the cheek to announce it as a major fight cock against rip off charges when all companies are doing is covering their own costs as a result of accepting card payments. Even the government’s own departments (e.g dvla) charged a premium jf paying by credit card. Useless politicians doing what they do best
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We never charged a fee, just absorbed it as a cost of running the business.
Annoying though that debit cards went from x pence per transaction to a %.
Having a minimum order amount will help with the smaller value jobs (we do photocopying)
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Don’t think I’ve ever charged a fee, even when I was with rip-off barclaycard charging 3%, changed to retail merchant service and the charges are negligible, tiny % and around £80 qtr for machine rental etc.
Cheaper than cash and cheques to be honest! We’re 10mins from the bank – branch just closed, but round trip to bank would be anything up to an hour plus fuel, I now use the post office to pay in as it’s on route to work but still, special regular trips to get to banks is more expensive than processing fees.
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quote Hugh Potter:Don’t think I’ve ever charged a fee, even when I was with rip-off barclaycard charging 3%right there is how the customers thinks if the fee is applied also. But it is now "that rip-off sign company" wanting 3% just to pay for my sign.
I was with a customer last week who is opening a high end electric bike shop with price average around £1200.
He is a one-man-band and was complaining because of this new law as his business plan was put together months ago and huge majority of sales is online or indeed paid by card. if he has to swallow those little percentages. even if he sells one bike per week, he will lose around £1800 per year in transaction costs, based on 3%.We lost a "one off" customer due to a £17 transaction fee. Could we have lost it in the job, yes perhaps. but we did not even get that far. And even if so, how are "staff" supposed to make that decision and when to apply it?
Then there is some of our big accounts who spend thousands at a time. Thankfully, this law does not apply there, but for how long?
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What annoyed me most was the way this was announced. They used provocative terms saying this was to end "rip off" charges which implied every small business that charged a transaction fee was now labelled as dishonest by the government. Which is blatantly unfair and untrue. A disgraceful way to put across new legislation, and proof of how out of touch many politicians are with the real world.
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Soooo… no longer allowed to apply a charge, but the car supplier is allowed to charge us still?
Class action VS card suppliers ?!
PS: We’ve never added a charge in the past for cards, but as a mainly B2B supplier 99% of work is via invoice with BACS payments.
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There is another way to look at this, which is how I ended up taking card payments. If you offset the time spent chasing lots of smaller invoices (and sometimes not getting paid) against getting immediate payment, better cash flow etc and no chasing, card payments are a no brainer.
If you can take the monthly charges on the chin, it is a better way to trade and the card companies have us over a barrel because of it.
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as far as I’m concerned the fee is just part of the office overhead, same as when a client pays by cheque/cash, it costs to put it in the bank.
If your business cannot take a couple of % hit in transaction charges then you need to put your prices up, change payment methods or lower your overheads (or all three) i.e. look very closely at your business and re-evaluate.
It’s a psychological thing, "this is the price – oh and then also we have to add on £x to pay for it" rather than "this is the price"
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If you were putting a charge of £3000 on a regular basis,would you think the same chris.
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If you’re paying 3%, that’ll be £90 out of a 3k job.
If you’re frequently taking large sums, and paying 3% you need to speak to your merchant provider and get a better rate.
We pay 1% on cash payments, so £30 + and hour taking it to the bank. Bank transfer costs nothing.
Customers may prefer to pay by credit card to ease their cash flow, with the benefit credit cards provide some consumer protection.
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quote Andrew O Brien:If you were putting a charge of £3000 on a regular basis,would you think the same chris.
For large invoices you would steer customer towards a bacs payment. Cards are for convenience and walk ins really aren’t they
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I just tell our customers straight if it’s a big amount they want to put through. Costs me to much.
Sometimes got to suck it up as large construction companies have cards for each employee and that’s only way. As mentioned above though it is a mentality thing, but then again it does all add up
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quote Paul Hodges:quote Andrew O Brien:If you were putting a charge of £3000 on a regular basis,would you think the same chris.
For large invoices you would steer customer towards a bacs payment. Cards are for convenience and walk ins really aren’t they
As Chris said. I’ve a lot of corporate clients. Makes it easy for them instead of setting you up as a supplier. Word spreads you take Amex, before you know it they all start ringing you.
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quote Andrew O Brien:If you were putting a charge of £3000 on a regular basis,would you think the same chris.
No as I wouldn’t expect (or accept) a £100k order paid for on a card, especially if it’s a regular payment.
Now, if you are talking £100k in transactions every month, costing £3k in fees then I would be negotiating heavily and ruthlessly with the card payment provider to get a much better rate.
When it comes down to it, its the cost of doing business – if you want/have to take cards, you have to pay a fee somewhere – the amount depends on how good a negotiator you are.
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95% of our trade is B2B, invoiced 30 days, payment via BACS.
We see very few cards (the small transaction fee we absorb).What I don’t like is the goverment bringing in rules that effectively telling uk businesses that they can’t pass on the transaction fees, yet the international banks still get to charge them – double standard, irrespective of if you absorb or pass on the fee.
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We had a job provisionally booked in for today, pending their deposit. We sent the pro-forma invoice for the deposit, which wasn’t paid. A quick call earlier this week and the customer paid in FULL the job on their card. (about £750)
From a sales view, remove all the barriers from the sales process.
For larger value orders, instead of paying x% in card fee’s, offer a y% discount for paying by BACS. Cheaper than card fee’s and the customer saves a few £’s.
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Playing devils advocate on this one couldn’t a business offer a total job price and then offer a percentage discount if paid for by any means other than debit/credit cards.
Therefore not charging card fees!Personally I absorb any charges in the cost of the job, I’m just happy to get the money [emoji23]
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