Some businesses have always added a surcharge to cover the cost of the fees charged to them by the companies who process debit and credit card transactions but from 13th January 2018 they are no longer allowed to add a charge to payments they take by card.

Businesses take payments from customers by cash, cheque, bacs, direct debit, debit or credit card.  Each one of these methods of payments, except for bacs, incurs a cost to the business.  Banks charge for depositing cash and cheques, card companies charge for providing a processing service.  These costs are part of doing business and therefore should be included as a cost of making a sale.  

It is expensive to accept cash payments because you need to bank it in order to pay your bills and banks can charge around 1% of the amount banked.  It may be difficult for you to get to the bank too so you have to factor in time and parking costs.

It is also expensive to bank cheques.  Banks charge around £1 plus approximately 40p per cheque so that cost can soon mount up.  And again you have to go to the bank to bank the cheques or put them in the post.  However this will become easier soon with the introduction of the new cheque clearing system when you will be able to send an electronic copy of the cheque to your bank.

So the fees for accepting payments by card are just another cost of doing business.  At least if you take a card payment the sale has been completed and the money will soon be available for you to use. And you don't have to spend time chasing your customers for payment so there are definite advantages in taking a payment by card.

HMRC have also stopped taking payments from a personal credit card but still offer various other methods to pay - see my recent blog about these changes.

Service charges and booking fees are still allowed but they must apply to all forms of payment and not just card payments.

This change is bound to affect pricing but should make it much clearer to customers what the end price will be.

How will this change affect your business?