HMRC Ban credit card oayments

chattychappy

PeacefulWaters wrote: »

I think it was an EU thing that triggered the latest change.

If so, then I'm going to go out on a limb and personally predict that nobody in the EU will be taking it as seriously as the UK. Even after we've left!

Just a gut instinct.:D:D:D

System

chattychappy wrote: »

If so, then I'm going to go out on a limb and personally predict that nobody in the EU will be taking it as seriously as the UK. Even after we've left!

Just a gut instinct.:D:D:D

As you probably know, the UK makes up a massive percentage of EU credit cards issued & also (uniquely) offer S75 cover on many credit card transactions.

Given that (on consumer products) the difference in interchange is 0.1% between credit and debit going forward, most businesses will just absorb the fee.

eskbanker

PeacefulWaters wrote: »

I think it was an EU thing that triggered the latest change.

It is indeed - for anyone interested in the detail I just followed the trail out of curiosity and it starts with the EU Payment Services Directive II, which the UK government is implementing via The Payment Services Regulations 2017, coming into force on 13 January 2018.

The explanatory guidance to this UK legislation states in clause 7.16:

PSDII introduces a ban on retailers’ ability to charge for the use of payment instruments, where their interchange fees are capped under the Interchange Fee Regulation, which includes the majority of consumer debit and credit cards. The Regulations go further by extending the ban on surcharging to all non-commercial retail payment instruments. This is intended to level the playing field across all non-commercial retail payment instruments and create a clearer picture for consumers in which they know the full price of the product/service they are purchasing upfront and are confident that there will be no additional charges when they come to pay using a particular payment instrument.

The relevant part of the legislation is Schedule 8 Part 3 paragraph 12, which amends the Consumer Rights (Payment Surcharges) Regulations 2012 by adding:

Fees any payee must not charge any payer

6A.—(1) A payee must not charge a payer any fee in respect of payment by means of—

(a)a payment instrument which—

(i)is a card-based payment instrument as defined in Article 2(20) of Regulation (EU) 2015/751 of the European Parliament and of the Council of 29th April 2015 on interchange fees for card-based payment transactions(2); and
(ii)is not a commercial card as defined in Article 2(6) of that Regulation; or

(b)a payment instrument which—

(i)is not a card-based payment instrument as defined in Article 2(20) of that Regulation; and
(ii)would not fall within the definition of commercial card at Article 2(6) of that Regulation if, in that definition, the reference to any card-based payment instrument were to any payment instrument and the reference to such cards were to such payment instruments; or

(c)a payment service to which Regulation (EU) 260/2012 of the European Parliament and of the Council of 14th March 2012 establishing technical and business requirements for credit transfers and direct debits in euro(3) applies.

(2) A payee receiving a payment by means of a payment instrument must not charge the payer, in respect of such payment, a fee which exceeds the costs borne by the payee for the use of that specific payment instrument.

eskbanker

Heng_Leng wrote: »

Given that (on consumer products) the difference in interchange is 0.1% between credit and debit going forward, most businesses will just absorb the fee.

But that's at interchange level and doesn't necessarily mean that the charges levied by acquiring banks on retailers differ by only 0.1% between credit and debit card transactions.

chattychappy

eskbanker wrote: »

It is indeed - for anyone interested in the detail I just followed the trail out of curiosity and it starts with the EU Payment Services Directive II, which the UK government is implementing via The Payment Services Regulations 2017, coming into force on 13 January 2018.

Thanks very much for digging that out. I was going to research this myself and you saved me the bother.

eskbanker wrote: »

But that's at interchange level and doesn't necessarily mean that the charges levied by acquiring banks on retailers differ by only 0.1% between credit and debit card transactions.

Also the "real" cost is higher than what the retailer is charged in terms of fees. Compared with, say, cash or bank transfer, there is a higher risk of getting a chargeback. This is particularly true of cardholder-not-present transactions where it's not unknown for consumers to cheat merchants by denying receipt of goods. Whilst rare, you only need a couple in a hundred to perhaps double the real cost of accepting cards.

Of course handling cash has a cost too.

System

eskbanker wrote: »

But that's at interchange level and doesn't necessarily mean that the charges levied by acquiring banks on retailers differ by only 0.1% between credit and debit card transactions.

I have to disagree.

There will obviously be downward pressure on credit card v debit card merchant fees if there is a massive differential going forward.

I would suspect there will be a move to homogenised merchant fees and interchange plus.

eskbanker

Heng_Leng wrote: »

I have to disagree.

There will obviously be downward pressure on credit card v debit card merchant fees if there is a massive differential going forward.

I would suspect there will be a move to homogenised merchant fees and interchange plus.

We're talking about different things - you're speculating about what may or may not happen to merchant fees in future (and may well be right) but I was simply observing that they don't currently correlate to interchange charges in the way you were apparently suggesting.

AllieKat

brewerdave wrote: »

I think it unlikely that the holiday cos. will refuse payment by cc. Too much business to be lost !!

Agreed completely, it'll be fine. And cheaper

System

eskbanker wrote: »

We're talking about different things - you're speculating about what may or may not happen to merchant fees in future (and may well be right) but I was simply observing that they don't currently correlate to interchange charges in the way you were apparently suggesting.

Large users (such as HMRC) will be negotiate fees closer to interchange rate - probably on a interchange plus percentage basis.

Smaller users will be on a flat rate (e.g. 1.75% for iZettle) for all card transactions.

eskbanker

Heng_Leng wrote: »

Large users (such as HMRC) will be negotiate fees closer to interchange rate - probably on a interchange plus percentage basis.

Smaller users will be on a flat rate (e.g. 1.75% for iZettle) for all card transactions.

You may be right that in some cases companies will be charged similar merchant fees for credit and debit cards but my point is that it isn't accurate to generalise that this is the case across the board as there is plenty of evidence to the contrary.

For example, take this thread from a few months ago, in which a small business confirmed that their merchant fees vary massively between debit and credit:

We are charged 2.3692% on every Visa credit card payment we take, and 2.2936% on every Mastercard payment we take, PLUS we are charged a monthly fee of around £50+VAT on top. We are charged 0.69080% for processing debit cards.

Another poster on there also linked to Netpay Merchant Services whose current published charging structure for their Costco affiliate deal is 0.685% for credit cards and 0.385% for debit cards.

Hence my observation that a 0.1% variance at interchange level doesn't necessarily translate into a 0.1% variance in merchant fees....