Are you aware that from Saturday 13 January all charges for payment using credit or debit card were banned?
Well that’s the effect of the Second Payment Services Directive (PSD2). And Brexit makes no difference because although these new rules are based on an EU directive, they will still apply even after we leave the EU because they are based on a change of UK law. it’s apparently intended to make the “single market fit for the digital age”. It also bans surcharging by both government agencies and local authorities. The UK government estimates that in 2010 alone, these debit and credit card surcharges totalled around £47 million.
What will your business do?
Because it could make a big difference to some businesses, especially those with high prices and low profit .
Ryanair, for example, until January 13 levied a full 2% fee on all payments by credit card. They will now have to meet the cost of that fee themselves.
Here at Bonallack and Bishop we will, of course, continue to accept credit cards when it comes to payment of our own bills – but the problem for us is that the ban means that we are also not able to charge a fee for payment of disbursements by credit card – even when we are simply collecting that money on behalf of someone else e.g. stamp duty or barristers’ fees.
Not sure about you, but, for example, while I don’t mind paying a fee when collecting small sums such as £3 for land registry office copies, I’m not terribly enthusiastic that my firm might have to pay say a £150 fee [if we are charged at 1.5% fee by the credit card company] just to collect a barristers £10k fee using a credit card.
As a result, we have now introduced a new policy that we can no longer accept credit card payment for certain transactions – including payment of deposits when buying property, for stamp duty, Ryanair and sizeable barristers bills.
Does anyone else have any thoughts on the best way to deal with this issue of disbursements?
I suspect that this change may well mean more competition between credit card providers on the fees they charge to businesses – I’m certainly looking to reduce the rates we pay.
What’s the best rate for credit cards transaction fees out there – and who is the provider?