Why card surcharge changes could threaten your next takeaway

Many businesses feel payment surcharges are necessary because of the high card surcharge rates that many financial institutions subject them to.

They feel consumer payment surcharges are essential to help them stay in business and fight those fees, especially smaller companies who are already making little in the way of profit.

That’s set to change from 13 January 2018 though, when payment surcharges are set to be scrapped thanks to a new EU directive set to be introduced; the second EU Payment Services Directive (PSD2).

Many industries are going to be hit when the directive is introduced, with the food and leisure industry one set for tough times. Earlier in July, when the Government announced the abolition of consumer payment surcharges, Just Eat’s shares fell as much as 9.4% in value.

Credit and debit card surcharges are set to be banned in UK and EU. Is your company able to absorb the cost of card processing? Take a look at our blog ‘Is your business prepared for the end of card surcharges?’ and prepare now to protect your profits in the future.

Are changes to payment surcharges really that bad for business?

The fall came because Just Eat generated 13% of its revenue last year (at 50p per card transaction) through payment surcharges. That’s a lot of revenue lost if Just Eat can’t find other streams by January 2018.

Others in the food industry also faltered on the announcement with shares in Domino’s Pizza falling by 2.2%. Surcharges also have a knock-on effect on the restaurant industry as a whole; if food delivery apps such as Just Eat and Hungry House don’t make up the surcharge, the cost would be picked up by the restaurant on top of commission they already have to pay on every order.

The exposure offered by those apps is a game-changer for them, though. It’s a complex business model and one that looks set to change in the New Year. A well as surcharges being banned on Mastercard and Visa cards, the Government is also set to ban charges on more modern ways of paying such as PayPal, Apple Pay and other systems developed by the fintech market.

How your business can weather changes to payment surcharges

It’s a huge dilemma facing smaller businesses in certain sectors looking to grow, especially brands in the food industry who feel they are already making slim profits without extra surcharge fees being added on top.

Prices will either have to rise or restaurant owners will have to try and create alternative sources of revenue to complement their existing ones, which would likely cost business owners extra time and money to implement.

Investing in payment surcharges guidance from payment processing experts before the changes come into effect can help you improve and optimise the financial side of your business, saving you both time and money before the new EU directive comes into force.

Though the changes in surcharges will be enshrined in law, restaurant owners and people looking to grow their business across other sectors can implement new ways of accepting payments and building better relationships with their customers to enhance their reputation and lessen the impact of the new EU directive.

Amending the ways you accept payments behind the scenes can not only help you navigate changes to legislation, but also position you for the future and help your brand reach the next level more quickly, while you spend your time focusing on its growth.

If you would like some leading payment surcharges guidance from an expert team who cares as much about your business’s growth as you do, contact Fibonatix today to find out more.

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