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Changes to Credit Card Charges – Quick Guide

2nd February 2018

Changes to credit card charges will affect small businesses especially if they have a large portion of customers paying by credit card. This guide will look at how these changes will impact small businesses.

When do the Changes come into effect?

The changes to credit card charges come into effect from the 13 January 2018. This is due to the implementation of the new EU directive which the UK must follow until Brexit.

What are the Changes?

Small businesses will not be able to add additional charges on goods or services which are paid for by debit and credit cards via Visa, MasterCard, American Express and is extended to include PayPal and Apple Pay.

How have HMRC dealt with the changes?

HMRC not allow the use of credit cards to make a payment to them.

How can small businesses deal with the changes?

If a small business previously charged an additional fee for credit card payments, then they will have to absorb the cost, add the cost to the price of goods or services or stop taking credit cards. It depends entirely on the number of customers that use credit cards to purchase your goods or services as which option your small business should follow.

If your average value of goods or services is low, then so will the credit card processing charges, so they could be absorbed. However, if you sell high ticket items then credit card processing charges will be significant, and you will have to decide whether to increase prices or stop taking credit cards altogether.

Give Customers Other Payment Choices

If your business decides to stop taking credit cards, then ensure that you give your customers other options of paying. Theses could include PayPal, Apple Pay or direct bank transfers. However, if you increase prices, you must ensure that it will not impact your sales or customer loyalty. You could opt to give a loyalty reward to log-term customers to compensate for the increase in your prices.

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