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Credit and Debit Card Surcharging Ends as New Year Begins

8th January 2018

This month will see card surcharges finally outlawed in Britain, but is your car dealership or garage business prepared for the rule change?

Commonly used in this country, surcharging is the act of charging consumers a fee if they choose to pay by credit or debit card. Whilst not all car dealers and workshops accept card payments, some that do take cards will also add on a surcharge amount, typically to pass on the cost of the payment processing fees they have to pay their provider.

Last July, the government agreed that January 2018 would be the month to abolish American Express and Paypal surcharges on top of the European Union’s initial pledge to ban surcharges solely on Mastercard and Visa payments. Although based on an EU directive, the rules are now UK law – so Brexit won’t make any difference to the ban.

HM Treasury say the changes are all about transparency and fairness, so there are no more nasty surprises for consumers at the point of purchasing, just for choosing to pay by card. They stated that in 2010, the amount of surcharges on credit and debit cards was an estimated £473 million.

While mainly airlines and food delivery apps are thought to be hit the hardest by these changes, the rules will also tackle surcharging by government agencies and local councils, and the automotive industry amongst others will also feel the effect of the ban.

It’s possible some dealers could decide to stop accepting card payments altogether going forward, or choose to absorb the transaction fees from their payment supplier as a cost – some may also choose to deal with the ban by increasing prices to cover their costs.

If you have been charging card fees up until now for customers paying car sales deposits and balance payments, and/or service or parts invoices by card, it’s worth checking (if you haven’t already) how much exactly this could affect your business.

Continuing to charge your customers a card processing surcharge means you risk being fined, so make sure your dealership is ready for the rule change that comes into force on 13th January 2018.



Dragon2000 have been helping dealers and garages drive their businesses forward since 1995. Talk to our team today on 01327 222 333 or email sales@dragon2000.co.uk to find out how our dealer management system, car dealer websites and mobile apps can help your business increase profits and reduce costs.

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