Card charges

[red_slr]

Does anyone know if the ban on debit / credit card charges is still coming in?
I have checked google and all the info I can find is from about 6 months ago.
Need to update our systems! Not seen anything on the news etc. Cheers!

[Jockman]

I thought it was 16th January??

Some have already scrapped them.

[eltawater]

Well, HMRC have helpfully highlighted that they are removing the option to pay your self assessment charges via personal credit card from the 13th January for this reason....

https://www.gov.uk/pay-tax-debit-credit-card

Edited by eltawater on Friday 29th December 00:51

[Mojooo]

https://www.gov.uk/government/uploads/system/uploa...

[Tafford]

Does the surcharge ban apply to business to business transactions too? I know that if a customer is using a corporate card charges are still allowed but what if a customer is a business using a personal card?

The ban give us a bit of a headache - our fee is a small proportion of the overall charges we invoice our customers for which include documents we buy in and pass on to our customers at cost. If they want to pay by card we then get charged a %age of the overall cost by the card processor which we currently add to our fee as a surcharge; this percentage of the overall cost will wipe out most of the profit margin on our relatively small fee. I can't see any easy / legal way around this other than raising process which will impact all customers however they pay.

[mlatham]

Tafford said:

Does the surcharge ban apply to business to business transactions too? I know that if a customer is using a corporate card charges are still allowed but what if a customer is a business using a personal card?

The ban give us a bit of a headache - our fee is a small proportion of the overall charges we invoice our customers for which include documents we buy in and pass on to our customers at cost. If they want to pay by card we then get charged a %age of the overall cost by the card processor which we currently add to our fee as a surcharge; this percentage of the overall cost will wipe out most of the profit margin on our relatively small fee. I can't see any easy / legal way around this other than raising process which will impact all customers however they pay.

The ban applies to consumer credit and debit cards only. Corporate cards are exempt and can still be surcharged. If your customer is a business but using a personal card, you cannot surcharge.

[eltawater]

mlatham said:

If your customer is a business but using a personal card, you cannot surcharge.

Is that actually correct though based on:

http://www.legislation.gov.uk/uksi/2012/3110/made

legislation.gov.uk said:

“Consumer” and “trader”

2. In these Regulations—

“consumer” means an individual acting for purposes which are wholly or mainly outside that individual’s trade, business, craft or profession;
“trader” means a person acting (personally or through an agent) for purposes relating to that person’s trade, business, craft or profession.

and

legislation.gov.uk said:

Excessive charges prohibited

4. A *trader* must not charge *consumers*, in respect of the use of a given means of payment, fees that exceed the cost borne by the trader for the use of that means.

Doesn't that mean irrespective of whether it's a personal or a corporate card, if the customer is paying for something as part of their business (e.g. stationary) surcharges are ok so long as they don't exceed the costs being borne by the trader (unless the trader is a new business or a micro-business when no limit applies).

Edited by eltawater on Tuesday 2nd January 13:42

[mlatham]

I think the regulation you quoted could be amended though. That was correct under current rules, however when the second iteration of the payment services directive (PSD2) comes into force on 13th Jan, things change. Note in here it applies to payment instruments covered by the interchange fee regulation. That should mean all consumer credit and debit cards, regardless of whether the underlying transaction is B2B or B2C.
Page 9 https://www.paymentsuk.org.uk/sites/default/files/...

Could be wrong though!

[eltawater]

These are probably worth a digest then:

https://www.fca.org.uk/publication/finalised-guida...

https://www.fca.org.uk/publications/policy-stateme...

https://www.fca.org.uk/news/press-releases/fca-fin...

http://www.legislation.gov.uk/uksi/2017/752/pdfs/u...

Edited by eltawater on Tuesday 2nd January 14:02

[eltawater]

6.13 is the key one I think:

https://www.gov.uk/government/uploads/system/uploa...

6.13 Taking into account the range of views received through the consultation, the government
has decided to extend the surcharging ban to all retail payment instruments. This will create a
level playing field between payment instruments and create a much clearer picture for
consumers in which they know the full price of the product/service they are purchasing upfront
and confident that there will be no additional charges when they come to pay for any payment
instrument they choose to use. A blanket ban on surcharging for all retail payment instruments
will also be much easier to enforce than the current position in which merchants are able to
pass on costs (but the consumer has no easy way of assessing what these are).
6.14 The government does not however intend to extend the surcharging ban to commercial
payment instruments, as these are not in competition with retail payment instruments.

[mlatham]

Thanks. From what I understand, the surcharge ban from 13th will apply to the actual payment instrument used in the transaction, not the underlying type of transaction i.e. B2C or B2B.

[red_slr]

Clear as mud then.

[Tafford]

Thanks - it may create a 'level playing field' for the consumer but it's not exactly level for the smaller sellers given the fees charged by the card processing companies!

[mlatham]

red_slr said:

Clear as mud then.

Indeed!

[mlatham]

Tafford said:

Thanks - it may create a 'level playing field' for the consumer but it's not exactly level for the smaller sellers given the fees charged by the card processing companies!

Worth shopping around at the moment. Usually savings to be made.

[hotchy]

Gonna be a pain for me. I actually dont mind paying a small charge. Local shop lets me pay 50p on stuff under a tenner. I understand they cant let me buy a tin of coke without it, they'd loose money. Now ill have to spend a tenner or have cash. Pain in the.... For me tbh.

[Contract Killer]

hotchy said:

Gonna be a pain for me. I actually dont mind paying a small charge. Local shop lets me pay 50p on stuff under a tenner. I understand they cant let me buy a tin of coke without it, they'd loose money. Now ill have to spend a tenner or have cash. Pain in the.... For me tbh.

I can see a lot of small businesses stopping card payments.

Im a sparky and had a worldpay account for the odd customer who wanted to pay by card on the agreement they payed the 2.5% fee.

I have now cancelled the account, as im not paying the fee for a customers benefit.

Its the customer who has lost out, not me.

At least before they had the choice.

[0a]

Out of interest has anyone else ran an A/B test removing card charges vs keeping them?

We did this late last year and definitely saw an uplift in conversion without them - enough for our tool to call higher revenue / UV to 90% certainty - this was on 30k transactions on both sides with a 1.5% charge for credit cards which we removed.

70% of our Online transactions are on credit cards though.

I doubt the same will be seen in store though.

[steve2]

We never know if our customers will pay by bacs, cheque, debit card, credit card or cash so if they pay by debit or credit card we just suck it up, although we try and get them to pay on a debit card rather than a credit card

[mlatham]

hotchy said:

Gonna be a pain for me. I actually dont mind paying a small charge. Local shop lets me pay 50p on stuff under a tenner. I understand they cant let me buy a tin of coke without it, they'd loose money. Now ill have to spend a tenner or have cash. Pain in the.... For me tbh.

Whilst that certainly used to be the case - when debit cards were charged as a fixed pence per transaction - it isn't any more. Most providers now charge a % rate for credit and debit cards (not universally true but mostly) so the cost to the business now of taking say a fiver should be less than 5p whereas in previous years it could have been 20-30p.