Credit and Debit Card Surcharges Changes to the Law
From Saturday 13th January 2018 it will be illegal for any business to add a surcharge to the amount due when taking payment by credit or debit card.
The understandable drive behind this appears to be to protect people being ambushed at the last minute with an expense over and above the principal amount due, which can be substantial especially where purchasing a big ticket item, such as a family holiday.
Whether this is good or bad news depends on many things.
If you are a consumer then potentially it could be good news as the price that you see is the price that you will pay, however we do not think that it is as simple as that.
The crux of the matter is that banks understandably do not provide the facility to accept debit and credit cards out of the goodness of their hearts; they charge fees for the equipment and a commission which can vary substantially from provider to provider depending upon a number of economic factors.
Many businesses have simply passed the net cost onto the payee so that it is cost neutral for their business, although some have abused this notion and profited.
The credit and debit card surcharges changes to the law from Saturday 13th January 2018 will mean that these abuses will no longer be possible and accordingly businesses are left with the choice of absorbing the cost into their overheads, increasing prices to cover the anticipated cost to the business or cease taking card payments.
Absorbing the typical cost is not an option for many businesses as profit margins are simply not there to do so in the current economic climate.
Some entities cannot increase the cost, for example local councils cannot simply increase Council Tax or Non-Domestic Rates, merely to provide the ability to pay by card. Indeed it is rumoured that some will simple cease taking card payments which could have a negative effect on many, especially those who do not have cash resources. In this example, if the cost is absorbed what will happen when the funding is no longer available for community projects because the budget has been exhausted by absorbing card fees?
What will happen if someone wants to pay a court order at the last minute and the solicitor or enforcement office no longer accepts card payments as it is cost prohibitive to them as a result of which goods are removed and sold or credit ratings are affected?
The jury is out, we will have to wait and see…