Good news or bad news? Government bans credit card acceptance fees from January

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• Talay says:

  20 Jul20 July 07:30

  In one of my businesses we use central cash management across the network given our quite high demands for change (mostly £1 coins) and the ridiculous fees charged by the main banks for first depositing cash into your own bank and then charging you again to take it out as change. They want to leg you over both ways.

  We looked at all the options, from the bank collecting from each location each day (Barclays new service) through to the Co-op FSB accounts (too restrictive, too low limits, no Co-op near !) and pretty much came up with the notion that we either switch banks every 6 to 12 months for free banking or we find another way. We argue with the banks and we can get rebates,often to 100% of charges but we get zero interest, which normally would help or even offset the charges.

  So the argument about a cost of around 0.6% for cash might actually be too low, all things considered.

  Branches take time to count the cash – not an extra expense but lost productivity
  Central administration counts the branch figures and prepares banking – perhaps an hour daily
  Physical banking and obtaining change – 15 minutes
  Security costs for onsite cash – minimal but present and at some point you may be robbed

  With debit cards at 0.3% and presumably zero bank fees on electronic submissions, that is by far the cheapest and easiest way. You do have a funding gap of perhaps 48 to 72 hours but you can reduce that for banking with Santander (Elavon) or Barclays (Barclays Merchant Services) etc.

  I am surprised though that in one of our most affluent areas, we have a stubbornly high 30% cash receipt.

  • Genghis says:

    20 Jul20 July 07:33

    Guvvy job money?

  • Scott says:

    20 Jul20 July 08:39

    Cash handling is not free to businesses. This is something that frustrates me in the wider debate around this and I’m glad this is acknowledged here. Consumers are used to ‘free’ cash banking services and are more often not aware of the charges that business have to pay.

    Adding up the charges, admin time and potential for losses and it all totals up to a significant overhead.

    • Ross Brown says:

      20 Jul20 July 10:14

      When we used to accept cash at my business, i set up a separate personal savings account with Barclays. Paid cash into it and transferred it across to our business account, which didn’t incur any charges.

      That being said it was a total pain and as of January 2016 we stopped accepting cash. We only accept card and it was one of the best things we’ve done. People do not understand the time, energy and not to mention risk involved in handling cash. There are so many better things I, or anyone that works with me can be doing than counting 50 pence pieces or trying to work out why a til is down £3.33 from last Tuesday.

      • Eoghan Galgey says:

        20 Jul20 July 13:33

        Yeah have to agree, it’s much quicker for the customer too. Nothing worse than waiting in line behind someone fiddling for change. Also, have to say yours is the best coffee in London!

        • Ro says:

          20 Jul20 July 17:55

          woah that’s a massive claim… what is this coffee shop? I must try!

        • Genghis says:

          20 Jul20 July 18:11

          Browns of Brockley, I believe

        • Ross Brown says:

          20 Jul20 July 19:41

          1) Thanks, that’s very kind.
          2) This website and comments perhaps not as niche as I thought..

• GK says:

  20 Jul20 July 07:35

  All the more reason to have the Tesco current account as back up for the club card points on debit card spend.

• Paul says:

  20 Jul20 July 08:04

  Under the new regulation they will still be permitted to pass on the ACTUAL COST of processing the transaction to the customer should they chose not to absorb it in other ways, just not add anything to it to round it up or make it a flat fee..

  So the list of fees from HMRC would seem to be indicative of what people like BA might continue to charge after 13 January next year.

  • Andrew (@andrewseftel) says:

    20 Jul20 July 08:52

    That was the current position, but the guidance published yesterday suggests no longer:

    The government has decided to extend the surcharging ban to all retail payment instruments. This will create a level playing field between payment instruments and create a much clearer picture for consumers in which they know the full price of the product/service they are purchasing upfront and confident that there will be no additional charges when they come to pay for any payment instrument they choose to use. A blanket ban on surcharging for all retail payment instruments will also be much easier to enforce than the current position in which merchants are able to pass on costs (but the consumer has no easy way of assessing what these are).

    • Mr Dee says:

      20 Jul20 July 15:37

      I could be wrong but I think the wording of retail payment instruments may be what HMRC can use to be exempt from the ban.

      I think HMRC will continue to accept credit cards one way or another.

• Alex W says:

  20 Jul20 July 08:08

  I’d like to think that HMRC will tell us in advance whether they’ll stop accepting cards.

  In other news, when trying to pay with Creation IHG Black card the other day, I got “card not supported”. Never seen this on a MasterCard before – wonder if it’s because it’s a World MasterCard?

• Chris says:

  20 Jul20 July 08:12

  Very sad that so many people can’t do a tiny amount of research to find the credit card fee loophole Rob mentions.

  The whole game of maximising hotel and frequent flyer points is a subtle one involving guile and self-research.

  • billy says:

    20 Jul20 July 11:17

    The issue is that most people didn’t even know that the loophole existed. Can’t search for something you aren’t aware off. Now everyone coming out the woodworks saying they have know from day one. Now its easy to find

    • Mzungu says:

      20 Jul20 July 14:50

      “The issue is that most people didn’t even know that the loophole existed.” True, but Rob alluded to it in the original article, so you could then go and search for it.

      I remember several months ago seeing a reference to it, so I went and found it. I subsequently used it, but have forgotten again since – doh!

    • Alan says:

      20 Jul20 July 20:32

      Although it has been mentioned pretty much every time in comments when the BA.com card fees have come up – I think this is just the first time it has appeared in the article.

      • the real harry1 says:

        20 Jul20 July 20:42

        I guess Raffles has to make editorial decisions – the non-pay option also appeared on FT a few times yesterday – I sympathise with those who say keep it close but given the change in credit card charges law next January, doesn’t really matter that much

        BA won’t put a solution to our crafty solution in place in the next 6 months (I reckon) so all this talk & gossip is meaningless – there won’t be a BA credit card surcharge next year

        maybe Raffles realised that – since he wrote an article on it! – & just thought – by jiminy, I’ll post that thought! 🙂

        might save a few people a few quid until the law changes

        • Rob says:

          20 Jul20 July 21:29

          That is a fair summary, I think.

        • Cassie says:

          21 Jul21 July 11:21

          If you don’t declare some income to HMRC, you can save yourself a few quid more…

          And if you torrent movies instead of buying DVDs, you can save yourself a few quid more…

          So many ways to save a few quid.

• JamesB says:

  20 Jul20 July 08:37

  The issue regarding rental of terminals etc inflating the real cost to merchants I get, but I don’t get why those fees were often passed on for processing a visa credit card but not a visa debit card?

  • RussellH says:

    20 Jul20 July 10:41

    Terminal (or online portal) rental is (was, anyway) a flat monthly fee. In my day £18.95 whichever provider I asked.

    Debit cards tend to be charged at around either a small percentage (I was charged 0.25%) or a flat fee of anything from 5p to 50p per transaction (though a friend of mine running a small hotel in Scotland says she now pays exactly the same for debit as for credit cards.

    Credit cards have always been charged a percentage of the transaction, anywhere from 0.374% to 5%

    • JamesB says:

      20 Jul20 July 13:49

      Thanks

• Andrew (@andrewseftel) says:

  20 Jul20 July 08:48

  HMRC might be willing to eat 0.4% in fees if it sufficiently reduces delinquency rates. Collecting debts is expensive!

  • Clive says:

    20 Jul20 July 09:29

    They might also be happy to charge you interest and penalties if you are stupid enough to be delinquent because of this factor alone.

    • Yuff says:

      20 Jul20 July 10:08

      I’m sure HMRC would rather the card company took that burden on;)

• James A says:

  20 Jul20 July 08:58

  I’ve always been pissed off that companies charge me a “credit card” fee when I use my Amex Platinum “charge card”. Why has this never been successfully challenged on a legal basis?

  • Clive says:

    20 Jul20 July 09:26

    Probably because it’s fairly obvious they could just rename it a ‘credit or charge card fee’.

  • Andrew (@andrewseftel) says:

    20 Jul20 July 10:08

    Probably small size of fees meaning it’s not worth the effort. Tragedy of the commons. Nothing stopping you yourself from challenging it in small claims.

  • Will says:

    20 Jul20 July 11:35

    Interestingly it appears section 75 does not apply to charge cards, which must mean they are not classified as credit cards and so I think technically you have a point.

    Everyone who got charged a credit card fee for paying with a charge card might be entitled to a refund!

    • Genghis says:

      20 Jul20 July 11:48

      But IIRC Amex have their own voluntary scheme on equal terms?

      • Will says:

        20 Jul20 July 18:43

        They do but you might be into a winner in court if you could show that charge cards are not credit cards by the fact the law treats them differently.

        It’s arguing over semantics for sure but legal people love that kind of thing.

  • Klaus-Peter Dudas says:

    20 Jul20 July 14:21

    At least my Platinum and Gold charge cards both say CREDIT on the back in the top right hand corner… 😉

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