SMES To Be Hit Hard By Credit Card Fees Ban
22nd January 2018.
New laws from the EU last week barred firms from charging extra fees for credit card transactions. This has had a negative impact on small businesses who are still facing tough fees from card providers. The Credit Protection Association understands the negative impact that has been felt by our members but insists there is room for manovere. Every business will need to adapt to new innovation or change in legislation, and this could encourage more timid businesses to embrace new payment methods.
A new ban on 3 percent charges on credit card fees came into force last week.
Many businesses are struggling to adapt, and some have added a minimum spend to their store, where customers will have to spend at least £5 or more if they want to pay by card.
About 6,000 small firms charged for credit card use before the ban and experts fear a significant proportion could take similar action to combat rising costs.
If restrictions on card use become commonplace, shoppers may find they are no longer able to spread out the cost of big-ticket items.
Wendy Scott, who runs wedding venue Crabbs Barn in Essex with her husband Geoff, 70, has stopped accepting credit card payments on account of the lofty fees from the providers.
“Businesses are being portrayed as being greedy but in fact the impact of this policy on small businesses has not been properly thought through.”
Labour MP John Mann insists Government rethink the new rule around credit card fees, which originated from an EU directive.
‘These rules are going to cause some small businesses serious problems,’ he said. ‘It’s a typical EU response to a problem – getting it the wrong way round.’
This new ban on credit card fees is causing issues for small businesses in the UK. Consumers are going to struggle to afford big-ticket items if more shop-owners prevent plastic, and shop-owners themselves are going to see the impact of a diminished demand. We encourage all business owners to adapt to this new law change. If you have to introduce a spending minimum for card transactions or even ‘cash only’ on purchases in store, then you must advertise these clearly in store. We would recommend businesses start to consider alternative methods of payments which you could offer to customers, such as prepaid cards and mobile payments. Small discounts could also ease the inconvenience for the customer and encourage loyalty.
For business owners who are struggling with their cash flow as a consequence, please get in contact with CPA. We can chase late and non-payers and advise on your credit rating and ranking. Get in touch through the details below!
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