In a recent statement, the Government has said that consumers will no longer be charged extra for using credit or debit cards when purchasing goods. As of January 2018, businesses will no longer be allowed to add on any surcharges for payments that are made by cards. Businesses that often add surcharges for such payments include airlines, food delivery apps as well as many small businesses.
The Treasury reported that in 2010, consumers spent £473m on surcharges alone. Currently, booking an airline ticket with a credit card has a surcharge of three per cent and popular food app, Hungryhouse adds 50p to the bill for paying by card. Many local authorities also charge around two per cent with the DVLA charging a flat fee of £2.50 on card payments.
The change in the law is likely to mean that some companies will have to increase their prices to cover the extra payments they receive from card payments. Banks will typically charge between 10p and 20p for each debit card transaction.
The key concern for businesses is whether the increase in prices, in addition to high levels of inflation will put untenable pressure on businesses, increasing uncertainty and potentially long-term insolvency. This in turn will put pressure on suppliers, who need to be conscious of the impact of these changes, and the amount of credit that they should extend to their customers.
Contact one of our specialist advisors on 01275 817320 for more information.