- New EU law has banned firms charging up to three per cent for card transactions
- Small shops could stop accepting cards because they can't afford the fees
- Around 6,000 small firms across the UK charged for card payments before ban
By Ruth Lythe Money Mail Chief Reporter
Published: 17:01 EST, 19 January 2018 | Updated: 17:01 EST, 19 January 2018
Thousands of corner shops and smaller retailers could stop accepting credit and debit cards following a ban on fees, experts warn.
New laws from the EU last week barred firms from charging as much as three per cent extra when customers pay by credit card.
The move was welcomed by consumer campaigners, but shopkeepers claim they face hundreds of pounds of extra costs to cover the fees they are still facing from card providers.
Some corner shops and small businesses said they had already started to reject plastic, with many putting up 'cash-only' signs.
New laws from the EU last week barred UK firms from charging as much as three per cent extra when customers pay by credit card
Other firms are bringing in their own fee, which would avoid the EU ban by applying it to cash transactions as well as debit and credit payments.
Another move by shopkeepers requires a minimum spend of £5 or more if customers want to pay by card.
About 6,000 small firms charged for credit card use before the ban, and experts fear a significant proportion could take similar action to combat rising costs.
If restrictions on card use become commonplace at convenience stores it will force customers to go to a cash machine before they can buy groceries, while shoppers may find they are no longer able to spread out the cost of big-ticket items.
Jeffrey Sandat, who owns Essex-based car dealership the Chelmsford Car Company, has stopped accepting cards.
He said customers used to take advantage of the zero per cent interest rate period offered on their cards, rather than taking on costlier car financing deals.
Mr Sandat said: 'Every time someone bought a car with a credit card we would be hit with a £250 fee.
'That was all right when we could get the money back by passing the cost on, but now we can't.
'If someone is ready to pay a fee then why shouldn't they use their cards?
'Now some people will end up taking car finance deals if they can't use a credit card, which are more expensive.'
Wendy Scott, who runs wedding venue Crabbs Barn in Essex with her husband Geoff, 70, has also stopped accepting credit card payments.
Mrs Scott, 66, fears some couples may struggle to pay for their weddings now they cannot use plastic, but says her business cannot afford costs of about £220 a time.
The move was welcomed by consumer campaigners, but shopkeepers claim they face hundreds of pounds of extra costs to cover the fees they are still facing from card providers
She added: 'I could push up prices for everyone but that doesn't seem fair for those who are not paying by card.
'Businesses are being portrayed as being greedy but in fact the impact of this policy on small businesses has not been properly thought through.'
Labour MP John Mann, who sits on the Treasury select committee, called on the Government to rethink the rules, which originated from an EU directive.
'These rules are going to cause some small businesses serious problems,' he said. 'It's a typical EU response to a problem – getting it the wrong way round.'
A Treasury spokesman said last night: 'Whether retailers choose to accept a type of payment, raise their minimum payment, or change their pricing is a commercial decision for them.'
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