08 Feb Ban on Passing Credit Card Fees on to Consumers Hits Small Businesses in the Pocket
A ban on passing on charges from credit card providers to consumers, which came into effect last month, is hitting small businesses in the pocket.
Businesses are now faced with the option of either increasing prices for all customers to cover the charges or taking a hit to their own bottom lines.
Before the ban came into force, the Government said the “rip-off card charges” were “unfair for millions of people across the country.”
Estimates from the Treasury show that such charges cost UK consumers a total of £166 million in 2015.
However, the Federation of Small Business (FSB) expects the impact on small businesses to be short-lived.
Lorence Nye, Policy Adviser at the FSB, said: “The most optimistic outlook is that businesses will have to shoulder a higher cost in the short term, but that will drive more innovation and new kinds of payments that allow them to reduce costs.”
The new rules, which are now in effect across Europe, are already spurring innovation in peer-to-peer payment apps, including Barclays Pingit in the UK.
The same rules have also prevented HM Revenue & Customs (HMRC) from passing on credit card charges to personal taxpayers, leading the Revenue to take the decision to stop accepting payments made in this way.