A ban on payment card transaction fees may be welcome news for customers – but some small businesses fear it could add to their costs.
New government rules will stop businesses from charging a levy on credit or debit card transactions from the start of next year.
While consumers will be pleased to see the back of surcharges of up to 20% on flights, event tickets and takeaways there are fears they may be hit by higher prices as small businesses pass on the extra costs. More and more transactions now involve card or contactless payments, often for smaller and smaller amounts.
In April, the average transaction value of a card payment slipped to £41.86, nearly £2 cheaper than a year before and over £8 less than in July 2011, according to figures from the UK Cards Association. Card payments made up 78.4% of retail sales in April, up from 67.5% in April 2010.
This means businesses, who face a processing fee for each transaction, are being charged for more transactions of a lower value – cutting into their margins.
Many have stopped charging a separate fee for card transactions, but often have a minimum spend for card payments.
Miriam Devlin, director at DIY store Thorns in Norwich, said that while there was a £2 minimum spend the shop did not charge for transaction fees.
She said: 'We probably do about 150 card transactions a day and 1,000 a week so it adds up.
'We are paying something like £600 a month [in transaction fees] so we do have to take that into account. It depends on the card but some charge a percentage and some have a fixed fee – usually something like five pence.'
The average card transaction cost was 5.55 pence for debit and 16 pence for credit in 2016, according to the British Retail Consortium.
The Grosvenor Fish Bar is one Norwich business which does charge 50p per card transaction, though only 15% of its transactions are paid for by card.
Co-owner Duane Dibartolomeo said the firm would either have to take on the cost or look for a different payments provider.
He said: 'I don't see us changing our prices. Some cards are a lot more than others so maybe we will have to stop taking certain ones but we might shop around for a different provider.'
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