The surcharge ban has caused waves across the independent business community. A lot of businesses are worried about their bottom line, fearing the impact as they now have to absorb – rather than offset – the fees that a lot of merchant service providers include as part of their monthly charges.
While, at the other end of the spectrum, some retailers support the move, believing that it will restore consumer faith in independent businesses, making them more willing to step in-store without the fear that a payment charge will be added at the final stage of their transaction.
From my point of view this change is a hugely positive move. In today’s almost cashless society, it’s crucial that retailers embrace card payments and remove every possible obstacle that may deter customers from making a purchase.
It always seemed counter intuitive to add a surcharge that effectively penalised the customer, giving them reason to take their custom elsewhere (often to your bigger high-street chain competitor).
As the ban approaches, it’s essential that you, as an independent business owner, take time to ensure you know exactly what you’re getting from the merchant services you pay for. It’s crucial that you compare the market to get the best deal for you – that means transparent pricing, and the right services, equipment and support for your business, as standard.
Firstly, identify if you are paying too much for your merchant services. The best way to do this is to go through your last statement and take away your terminal fee, to leave you with the processing costs. Take this figure, divide by your monthly turnover and then multiply by 100.
By my rule of thumb, if the figure you’re left with is 0.7 per cent or more, you could benefit by switching provider. To help give you context, a business with a turnover of £10,000 pcm should not be paying more than £70 pcm on processing costs.
Secondly, I’d always recommend that you find a provider that doesn’t add ‘stealth’ fees on to your monthly bill. Charges to be mindful of are authorisation fees and joining fees. You might also see some providers add charges for PCI DSS compliance, or non-compliance, and unnecessary premiums for ‘card not present’ transactions.
We should welcome the surcharge ban but we need to ensure retailers aren’t penalised in the process. The perfect resolution would be for card acquirers to offer both small and large businesses differential pricing – that is, card processing pricing based on their ability to pay.
This is particularly timely given that this October, Visa is going to force all contactless card payments online for authorisation. This move could see card acquirers add additional authorisation fees – that the retailer will have to absorb from January – even though there are minimal costs to process this, from their point of view.
Mark Latham is director at Handepay, a merchant services provider offering bespoke services to businesses.