In a surprise announcement, the Government has decided to ban credit card acceptance fees from 13th January 2018. This is the next move after the EU cap on interchange fees – if retailers are meant to be paying no more than 0.3% to accept standard Visa and Mastercard products, the Government must think that they can afford to absorb the fee altogether.
From the viewpoint of HfP readers, this will mean the end of credit card fees when booking flights. (Of course, the BA fee has always been voluntary for those in the know …..)
More importantly, though, you may be excited by the additional possibilities for running up credit card spend to earn more miles and points.
After all, no-one will be charging after 13th January so surely life will be better?
Real life isn’t that simple, of course.
As retailers who read HfP always point out in our comments section, fees for shops have not come down to 0.3% for anyone not called Tesco. This is because charges to retailers include the rental of payment terminals and various other services which lead to a far higher overall fee.
On the other hand, as a reader pointed out yesterday, he is charged 0.6% by his bank for depositing CASH. Given that it also needs staff time to count and sort it, he would be happier if all his customers used cards.
This ban will disproportionately impact the acceptance of American Express, since Gold and Platinum cards are not impacted by the interchange fee cap. Stores will also be hit hard if they accept business, ‘premium’ (eg World Elite) or foreign Visa and Mastercard products.
Whether this decision turns out to be a ‘win’ for American Express, or card acceptance in general, remains to be seen.
Don’t get carried away by the potential for HMRC acceptance
I had a few emails yesterday from readers who were delighted that they would be able to pay their income tax, PAYE, VAT etc for free with their credit card from next January.
These people are living in fairy land.
At the moment, HMRC charges you – almost exactly – the interchange fees levied by Visa or Mastercard. These are:
VISA Personal Credit Card 0.415%
Mastercard Personal Credit Card 0.386%
Mastercard World Premium Credit Card 0.374%
Mastercard Signia Premium Credit Card 0.606%
Mastercard Elite Premium Credit Card 0.606%
VISA Business Credit Card 1.508%
VISA Corporate Credit Card 1.744%
VISA Purchasing Credit Card 1.755%
Mastercard Business Credit Card 1.973%
Mastercard Corporate Credit Card 2.248%
Mastercard Purchasing Credit Card 2.406%
Mastercard Fleet Credit Card 2.134%
Anyone who thinks that HMRC is going to absorb a credit card charge of as much as 2.406% is dreaming. It is more likely that the Revenue stops accepting credit cards.
Even at 0.386% it would be a noticeable hit to tax revenue if every small business, sole trader or individual with additional non-PAYE income started to use a card.
The only reason it may continue is that …. well …. it’s the Government we’re talking about here.
Speaking personally, though, I think I will be paying my January 2018 tax bill BEFORE 13th January (for a 0.38% credit card fee) rather than gambling that the facility will still be available after that.
Want to earn more points from credit cards? – September 2021 update
If you are looking to apply for a new credit or charge card, here are our September 2021 recommendations based on the current sign-up bonus.
The following offers will expire on 2nd November 2021:
- 10,000 Avios on British Airways American Express
- 40,000 Avios on British Airways American Express Premium Plus
- 60,000 points on The Platinum Card from American Express
Here are the top current deals:
British Airways American Express
10,000 Avios for signing up, no annual fee and an Economy 241 voucher for spending ….. Read our full review
British Airways American Express Premium Plus
40,000 Avios and the UK’s most valuable credit card perk – the 2-4-1 companion voucher Read our full review
American Express Preferred Rewards Gold
Your best beginner’s card – 20,000 points, FREE for a year & two airport lounge passes Read our full review
The Platinum Card from American Express
60,000 points and an unbeatable set of travel benefits – for a fee Read our full review
Virgin Atlantic Reward+ Mastercard
15,000 points bonus and the most generous non-Amex for day to day spending Read our full review
Earning miles and points from small business cards
If you are a sole trader or run a small company, you may also want to check out these offers.
American Express Business Gold
20,000 points sign-up bonus and free for a year Read our full review
American Express Business Platinum
40,000 points sign-up bonus and a long list of travel benefits Read our full review
British Airways Accelerating Business American Express
60,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios Read our full review
Capital On Tap Business Rewards Visa
The most generous Avios Visa or Mastercard for a limited company Read our full review
For a non-American Express option, we also recommend the Barclaycard Select Cashback card for sole traders and small businesses. It is FREE and you receive 1% cashback on your spending: