A ban on passing on intercharge fees from credit card providers to consumers, which came into effect at the start of the year, is having a negative effect on the profitability of small businesses.
Business owners have had to make tough choices; faced with the option of either increasing prices for all customers to cover the charges or absorbing the costs themselves.
Before the ban came into force, the Government had argued that “rip-off card charges” were “unfair for millions of people across the country.”
Estimates from the Treasury showed that such charges cost UK consumers a total of £166million in 2015.
In a bid to protect their bottom line, an increasing number of small businesses are either imposing a minimum spend on credit cards or refusing card payments.
According to recent research by the Association of Convenience Stores, 33 per cent demand a minimum spend while 8 per cent refuse card payments.
However, it is not just SMEs who have taken action following the ban on the passing on of credit card charges. The rule changes have even led to HM Revenue & Customs (HMRC) taking the decision to stop accepting payments made in this way.
It is hoped that in the long-term, the new rules, which are in effect across Europe, will encourage investment and innovation in peer-to-peer payment apps, such as Barclays Pingit.
At Moore Thompson, we offer expert advice to SMEs and can provide practical help and support to ensure their business remains profitable in both the short and long term. If you have clients who might benefit from our assistance, please contact us.