New rules for companies taking payment by credit and debit cards
On the 13th January 2018 new rules were put in place on all companies that take payment via credit and debit cards which may affect your business.
The change came in as part of a law setting out new payment regulations. The regulations are based on the latest Payment Services Directive (PSD2). This is an EU directive which applies throughout the EU. Since we are still currently in the EU, and the directive is transposed into UK law, the new rules will continue to apply after Brexit.
Under current rules, which came into force in 2013, companies should only surcharge customers a reasonable amount to cover what it costs them to process a debit or credit card payment. However, this has proved to be almost impossible to police and many companies (including some government bodies such as the DVLA) have been accused of charging excessively and using it as an additional revenue stream.
As of Saturday 13 January all surcharges for paying via credit or debit card were banned – this includes payment methods linked to your card, such as PayPal or Apple Pay, but, perhaps surprisingly, companies are still allowed to levy a surcharge if you opt to pay by cash or cheque.
The theory behind this change is that the EU has previously issued new regulations regarding the amount that the card issuers for the main card schemes Visa and Mastercard are allowed to charge as Interchange (the fee the issuer charges your processing bank or ‘acquirer’. As a result, merchants should have seen some of this saving and should no longer need to make a surcharge to cover the cost!
This previous change did significantly reduce the charge on consumer credit cards, although it altered the charge on debit card transactions from a pence per transaction basis to a percentage of the value. It is also questionable as to whether the full savings have been passed on.
This is the latest in a number of changes in the rules relating to how card payments must be processed which have been introduced over the last couple of years by the European Commission, the Card Schemes (Visa and Mastercard), and even the banks, which in some instances may have resulted in your card charges actually going up rather than down, and despite the regulations calling for greater transparency, your monthly statement may now be more complex than previously, making it difficult to work out what you are actually being charged.
There is a service available to IGA members with specialist Payments Services Provider RSM 2000 Ltd. to provide a clear, simple, and cost-effective card services package. If you would like to find out more about this service, or even just get a sanity check on whether your current card services provider’s charges are reasonable, please call the IGA member helpline on 0845 305 4230.