January 11, 2018
Under new legislation, UK businesses will be banned from charging fees for credit or debit card payments from 13th January 2018. At present, businesses are allowed to charge what it costs them to process a debit or credit card payment, typically around 2%.
Under the new rules customers cannot be charged at when choosing to pay by card. Effectively this means all surcharges are banned, and businesses cannot pass on any of the costs of processing debit or credit cards to their customers.
Alex McCulloch, Head of Business Development at Consumer Credit Solutions, believes this change in the law could impact how companies choose to take payment in the future.
He commented: “Instead of simply absorbing the 2% cost on credit card charges, it may be better for companies to offer customers an alternative payment method. For example, at CCS we can provide a ‘Buy Now Pay Later’ finance product that gives customers up to 12 months to pay for their goods, and provides the same consumer protection, for the comparable cost of a credit card fee.”
Alex added: “From our lenders’ research we know that finance messages attract more customers and increase order values; and having the ability to market goods as ‘buy now with nothing to pay until 2019’ is an especially powerful differentiator in very tough market conditions.
“When it comes to customer payments, in any form, fees or surcharges can’t be avoided and clearly businesses are not going to completely stop taking credit cards. However, it’s well worth businesses re-evaluating whether you can give you and your customers a better option for similar costs.”
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